I’ve been researching successful SaaS companies in the marketing space. On my quest I came across articles and videos with insights that I then decided to distill into this article about the Marketo and Engagio Go To Market Strategy .
When it comes to marketing strategy Marketo and Engagio started with a marketing driven pipeline, a Go To Market model where 80% of the pipeline came through the marketing engine. Versus other GTM models that can be product led (self-serve software) or sales led (sales people selling enterprise software).
They pioneered the demand generation model, where they ran content campaigns to capture leads, then ran through lead nurturing and lead scoring to get as many as possible converted into sales.
Then overtime they started moving up-market, going after larger companies that better fit the ideal customer profile, and do more marketing to their install base.
What all those had in common was that the big fish didn’t just happen to swim to their net. They realized that the Go To Market model they’ve built which worked really well in the SMB world, wasn’t working as well for the whales (the bigger companies).
Learning from Jon Miller's Experience
Jon Miller who was CMO at Marketo took their team through big contortions to try make Marketo and Salesforce work, to get the tooling for account based marketing. That marketing model was fishing with spears. The difficulty of going through that process inspired him to start Engagio.
The difference between the two softwares is that Marketo is a great platform to “fish with nets”(get many leads at the top of the funnel). Engagio is a great platform for fishing with spears, known as Account Based Marketing (find qualified leads and target them directly).
When he started Engagio the way he did 0-$1M in ARR in 15 months is he raised $10M in Series A from the beginning. The market of Account Based Marketing was at an inflection point, Demandbase has been around but he saw how things can improve and the timing was right. He chose that category because it felt nascent but ready for the product.
The first product was not complete, but it solved a pain they came across in the world of ABM. The pain was that Marketo, HubSpot, Eloqua are lead based tools. You login to Marketo and see literally a list of leads. In Salesforce you also have leads that are separated from contacts and accounts. As a result companies have a challenge when they try to think of Account Based, they can’t see everything that’s happening at the account level.
When it comes to marketing one of the first things he did is attacking the market with a thought leadership strategy: They created educational guides. For example The Clear and Complete Guide to Account Based Marketing. 120 pages of high quality writing production, not selsley, meant to educate. The premise is basically if you want to know about this hot topic, this is what you want to read. Very readable and scannable. The guide was $20, but you could get it for free if you sign up for a demo of Engagio.
In addition to the guide they did a lot of partner marketing, because they had a hot topic people wanted to talk about it. They said let’s do a webinar and partnered with predictive analytics companies that are complementary tools. Then they did webinars with them where both companies invited their contacts. They talked about Account Based Marketing and shared the leads.
At first they didn’t have leads nor a list to invite, but with each webinar their database got bigger and they were able to invite more and more leads.
Once leads were interested, the playbook to go close them was founder-based selling. Jon was the salesperson. He was able to shift from founder selling to first sales hires when he was overloaded with demo leads.
How to Hire Salespeople Like Jon Miller at Engagio
In B2B early stage companies sales people will also function as Account Executives to manage, grow, and renew accounts.
The advice Jon gives is don’t hire one salesperson/account executives, hire two.
The reason is because if you have two reps and they both are successful, then you know that you probably have product market fit.
If you have two reps and neither is being successful, it’s a pretty good signal that you’re actually not ready yet (foundational problem).
If you have two reps and one is successful, then you know it’s performance. The problem is if you only have one you miss out on those signals.
When they hired at Engagio, they hired two salespeople. Both had experience working at early stage startups. One had 15 years of experience, the other one had 6 year of experience selling complex enterprise deals. The more junior salesperson had an entrepreneurial drive.
They hit a $1M as a team of three (founder and two salespeople) before hiring an SDR (Sales Development Rep, who’s job is usually qualifying leads ). That basically means that their marketing efforts mentioned above have generated enough qualified leads without needing an SDR.
Jon sold most of his deals initially on 3 plus 9 terms, that means it was an annual deal that a customer can opt out of after the first 3 months. The reason he did that is because they were brand new, unproven.
It allowed him to go to customers when Engagio didn’t have much and say it's a $20K annual subscription, but you can try it out for the first 3 months for $5K. Very few opted out after 3 months. That was a strong signal that the product had value, and it was time for the two reps.
Rethinking GTM and Renewals
After the first million in ARR when it came time to renew, 80%-85% of customers renewed from the founder’s sales.
Then looking at what the new salespeople sold, the renewals were lower at 60%. The problem was that by that point based on prior good signals Engagio had started to really scale. They raised a Series B, they hired more people, they were spending more money, they increased the burn.
They had to start asking themselves, do we really have as much product market fit as we thought we did?
It made them start rethinking things and enter the second phase of their GTM.
Finding Go To Market fit isn’t about just that initial win, it’s about making sure that renewals are there year after year.
Their first product was bringing the data together and exposing it back out for analytics, that product was good and it worked. However Jon believed that they are not going to build a billion dollar company as an analytics tool, bringing the data together. They had to build something that’s operational like a Marketo, where you run your processes instead of just logging in to look at interesting reports.
They started to build a second product that was more operational. But they didn’t get it right at first, because they positioned it initially as a tool for sales development reps and not marketers.
That put them in competition with tools like Outreach and SalesLoft. It wasn’t what they were or who they were suited to.
What they realized was that in order to do Account Based Marketing companies had to do work to get the marketing and the sales team to talk to each other. Engagio saw that once companies had more than 7 weekly active users (the company got the salespeople to use the software and the salespeople saw the value) they had 93% retention.
The playbook then started to include getting customers operationalized. Engagio didn’t think about it at first, they thought that customers will use the product by default when they buy it (the notion was “of course they will operationalize it, because it’s that good”). They were wrong and realized that they had to do work on helping customers get operationalized.
Ultimately their sales playbook was working well, but to retain customers and optimize renewals they had to rethink how they did things by operationalizing customers.
For example they realized that selling to a 15 person company wasn't as effective because they couldn’t get to 7 weekly active users, they just don’t have enough sales people. So Engagio changed compensation for sales, sales development, and marketing, to get paid better if they created a pipeline with companies that were a better fit for renewals.
The other thing they did is to make the sales process “harder”. Their sales cycle is an average of 68 days. ASP (average selling price) $30K. They added a 8-10% charge of the contract for onboarding services, it could get up to 15%. To make the customer know that they are getting something of value with the onboarding training.
The professional services package is also a signal that the software requires work, because professional services provide guidance and training on how to best utilize the software. Professional services can also create urgency, you define a 90 day limit to the services and give them an incentive to actually get moving because there is an expiration date.
As part of their improved GTM (optimized for retention) they now require customers to sign a success plan as part of signing the contract.
The success plan includes things like “What does your 90 day implementation look like. And “Who’s going to be involved?” “What are the milestones?”.
Adding that speed bump required also to lower quota for salespeople, because it was more important to win the “right” leads instead of “more” leads.
An interesting insight that Jon mentioned is that he wishes he had a better set of signals on where they were with GTM fit before scaling the cost side. Because when you ramp up your sales and marketing, your burn goes up and it’s hard to bring it down.
He wishes he had an insight into the renewal and long term utilization sooner. That’s why predictive metrics (companies like Aptrinsic) that tell you if people are actually using your product are important to use in GTM execution.
Figuring out what engagement metric that would be (7 weekly active users for example) is the key. Because then you can reverse engineer and figure out what needs to line up underneath to make it happen. For example onboarding process, product piece, customer success, customer profile.
Also figure out what metric is the #1 predictor of retention, there can be use cases in the sales process correlated with the metric being good or not.
What Was Marketo’s GTM Playbook?
Marketo’s GTM Playbook was inbound marketing with content to educate the audience and help them find the solutions instead of cold outreach.
So it was marketing working on demand generation as the first part of the playbook. The key thing to remember is that they had relatively lower price points, about $20K ACV in a category people knew about, because they competed with Eloqua. The customer acquisition strategy was to cast a wide fishnet of leads.
At Engagio it was higher ACV at $30K, a newer category. So they needed to do “spearfish” customer acquisition, knocking on people’s doors, reaching out to them, calling them, that’s what account based marketing is all about.
The Specific GTM Strategies
The Marketing unit owned the GTM playbook by creating awareness and thought leadership. They looked at leads data to find very strong signals, then sales took it. This way the customer could make a decision relatively quickly because those leads were lower in the purchase funnel.
The team did a lot of content marketing, the content they defined as relevant for their business was anything educational or entertaining to their target audience.
That created awareness. Then they also wanted to create preference, people liking and trusting Marketo.
B2B brands are all about reducing risk and building trust, you can do that with thought leadership. Because people trust experts, they put content energy into building thought leadership that would help position them as experts in the category. For example for the topic of lead nurturing, they wrote The Definitive Guide to Lead Nurturing.
When they built their leads database they categorized leads based on readiness to buy, they had a category name to identify purchase intent. Just because somebody downloaded something from the website, it doesn’t mean they are actually ready to talk to sales, so how do you continue to develop that lead and keep in touch until ready to hand off to sales?
Through the nurturing process with educational information and email campaigns which required a lot of content. Their GTM was based on that, but it’s also what their software enabled.
The leads that were not ready yet to buy would enter
They created RFP templates and buyers guides. Analyst reports evaluating the category was one of the strongest signals. Those actions were tripwires to show a buying signal, after which the leads were passed to sales development reps (SDRs). That was the first time a human reached out to a prospect via email to schedule a call.
One thing to note is that they always tried to figure out how much to pass to the SDRs, because they wanted the bar to be high enough so they don’t call people who don’t actually want to be called.
The SDR then did a BANT qualification (Budget, Authority, Needs and Timing), in particular they focused on the need and timing. Is this a business that could use our software and do they have a project in the next 6 months?
The call would be scripted, lasting 10-15 minutes. The call with the SDR didn’t add much value to the buyer, except to crystallize their buying intent.
Then the lead would be scheduled with the Account Executive (AE) for the first sales call for discovery, talking about business pains and challenges. Then come back to them with a demo that actually maps to their business needs and environment.
They also focused on differentiators, case studies, and their software benefits over others.
The rule was: if after the first sales call the AE thinks the lead is worth their time, then they would create an opportunity.
Marketing and sales development had a payment incentive when the AE created the opportunity. They had a quota for creating a pipeline of opportunities.
The next meeting in the opportunity stage is the demo and more of why Marketo. That meeting also covered pricing and what the buying process looks like to move forward.
The ‘Ask’ was can we send you a proposal. Sometimes there is a second demo request with more people.
The “wow” is usually the content thought leadership. The next “big things”. Demos that you can watch online where important content. The 9 minute demo was a tripwire, because if you wanted that, you are much more ready for the next step.
They were competing against Eloqua, whose reputation was that it’s complicated and hard to use. The positioning of Marketo was we’re like Eloqua but cheaper and easier.
When you’re an entrepreneur and you can find a category where there is a known company doing what you’re doing, but you’re doing it better. It’s a good category to play in because of the easier positioning. For example during the demo it was “wow” it would take me 20 minutes in Eloqua, I can do it in just a few with Marketo.
During the opportunity demo stage the salesperson would let the prospect play with the software in a guided fashion: click here to do X.
In the guided evaluation of the product the main thing they wanted for the prospect to see was the ease of use.
The way they showed it was: let’s go build a list, let’s go build an email campaign, build a landing page, an example workflow.
They had a mantra at Marketo “make the common things easy and the hard things possible”.
For example they showed during the demo: if you just want to take the list of VPs and send them an email, super easy. If you want to do something complicated, you need to do some stuff but it’s possible.
Closing the deal
To close leads there was the 3+9 months selling strategy because sometimes what the customer really wanted is “try before buy”. So try it for 3 months at the price of a third of the annual deal, then it will extend to another 9 months.
The sales cycle from Opportunity to Win was 45 days.
At scale the cycle from entering their database to becoming an opportunity was about a year.
The Win is not the end, it is the commitment to get started
After onboarding overtime they started thinking about Advocacy and Cross sell. They built a pretty good customer marketing team to execute that.
Unlocking cross sell was really hard - people tend to think “I’m going to put all this energy into marketing, creating leads, I’ll have SDRs following up on leads on the new business side, and cross revenue will just happen magicly by itself.
Marketo didn’t really unlock the cross sell until they said “no, it requires dedicated marketing & sales development in order to develop and create those cross sell deals.
Overtime in Marketing they started to have a quota for pipeline creation for cross-sell deals. This was SMB Go To Market model.
Overtime as Marketo moved upmarket, the enterprise GTM looked different. The onboarding in the enterprise was also much more complicated.
What the rest of the company was doing to support the sales cycle
- In awareness and thought leadership: corporate marketing, brand, PR.
- Advocacy of Happy customers, harnessing the power of their customer base - Marketo eventually branded that as the “Marketing Nation” (inspired by Raiders Nation).
- Huge content angine by the marketing team pumping out daily blog posts, e-books, guides.
- Competitive analysis done by the product marketing team
- The wanted product telemetry but didn’t have it back then: analytics about customers, what customers were really doing, and sharing that back to marketing and sales.
There was tension between educating and showing how well things work, and then a customer would buy it and say “I want that” “I want it to work like in your guides and presentations”. They solved that by hiring into the services team marketing experts. Because onboarding required a certain knowledge and experience to deliver to that level.
Marketo was in a category reasonably defined (marketing automation), mid to low ACV (Annual Contract Value.
Relatively high velocity (monthly cadence). Aimed for CAC ratio of 1 like most SaaS companies.
In every dollar in sales and marketing, they got a dollar in new bookings. That dollar was 50% sales and 50% marketing.
80-90% of the pipeline was generated from marketing, so sales people weren't spending any of their time talking to people who weren’t actually in active deal cycles.
The buyer and decider was usually the VP, the price was under $25k so it was easier to purchase.
Changes made overtime to the playbook
They changed pricing around bundles of features. That drove more cross-sale to move customers to larger bundles. On the product side learning overtime “what are the feature sets” that are going to cause customers to want to jump from stage to stage.
As Marketo moved up-market they evolved to look like “spearfishing” more than “casting a wide net”.
Something to keep in mind is that in more complex deals, marketing and sales become much more intertwined functions. Sales was involved with opening the door, and marketing was involved in the sales process with setting up field events.
The reason playbooks are called Go To Market fit and not Sales fit, is because it involves marketing and sales.
It’s all about working on finding that Go To Market Fit (GTMF) to get to the repeatable and scalable sales that unlock growth.
The exception is not just a sales or marketing effort, it’s all the pieces working together to drive results.
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