CMO Insights: David Lewis, CEO of DemandGen

October 18, 2017

This week’s guest on CMO Insights is David Lewis, CEO of DemandGen.

In this video, David discusses

  • How more and more companies are adding a marketing operations function to their business model
  • The pressure on marketing as a department to become a revenue center vs. a cost center
  • The ever-expanding role data is taking when it comes to driving marketing initiatives.

Learn more about David from his LinkedIn profile and follow DemandGen on Twitter.

For more great CMO interviews like this one, please check out our CMO Insights Playlist on our YouTube channel.

Full Transcript

Jeff Pedowitz:

Hi, welcome to Revenue Marketing Television, the CMO Insights Channel. I am your host, Jeff Pedowitz, President and CEO of The Pedowitz Group. Today on our show, I have my good friend and competitor, CEO of DemandGen, Dave Lewis. Dave, welcome to the show.

Dave Lewis:

Good morning. How are you, Jeff?

Jeff Pedowitz:

I’m doing fantastic. I’ve actually been looking forward to this for a long time. And I mean, considering how often you and I talk, the fact that we’re going to capture this on video is really, really cool.

Dave Lewis:

Monumental to, to friends and competitors live and, and doing a video together,

Jeff Pedowitz:

Tightens an industry. So how it’s been wide about since you started with LMA, you’ve been in this one now about 12, 13 years.

Dave Lewis:

So since the beginning of Ellie Mae, yeah, just over 13 years and running demand gen for June actually next month is his 10 year anniversary

Jeff Pedowitz:

Happy anniversary. That’s fantastic. So for you then a lot of change for both of us over the first 10 years, but what’s changed the most

Dave Lewis:

What’s changed the most. I mean, I think at a macro level, everybody has awakened to the marketing has become both an art and a science. You know, when, when I started the practice, it was really just marketing. Automation was the only real marketing technology besides the website and website related technology. And now we’ve got what close to 5,000 different tools and technologies. So as more and more MarTech beyond marketing automation has kind of come into play. It’s really the discipline within the discipline of marketing. And you’ve got almost a, what they called marketing operations, but this, you know, it function within marketing. So that’s changed dramatically from when I started, because it was my creative team and marcomm team that was embracing these tools in the beginning. And you would never think to do that today.

Jeff Pedowitz:

So I know a few years it’s been, what about four years ago that Gartner made that prediction, maybe five that they said by, by this year marketing would control more it spend in marketing.

Dave Lewis:

Yeah. I mean, I don’t know if that’s, I don’t know, I’m not measuring how much now more it is spending or marketing, but certainly it’s a huge number in the, in the budget for marketing and you, and I talk about that, just running our own companies, how much we spend on our own infrastructure.

Jeff Pedowitz:

We absolutely do so. But what do you, I mean, I see the same thing at our clients. I see them spending more and more technology, but we’re not necessarily seeing companies add more headcount because there’s this assumption that the technology is going to fix it. So we find marketers are even more challenged because now instead of running one system like a Marquetta or an elk or something, now they have to run multiple. What about you? You see that too?

Dave Lewis:

Well, I have seen companies and I see more and more companies adding marketing operations as a function and hiring a marketing operations manager, marketing automation manager, and data resources, campaigning resources. So I definitely see growth and swell within the departments outside and, and a lot of restructuring.

Jeff Pedowitz:

So from a personnel perspective, you know, obviously you’re in the business of supplying top talent, but what kind of skills do you think today’s modern marketer needs? Beyond just understanding technology to be successful in their careers.

Dave Lewis:

I was doing a radio program, you know, my, the demand gen radio or podcasts. And I was doing that with Scott Brinker and he and I were talking about our backgrounds, which was in computer science. Initially we were both, you know, childhood programmers and went into computer science. And then I switched my major to marketing and the strongest, some of the most successful people that are leading marketing operations functions and really pushing the technology. It seems to have that part geek and part chic, you know, the marketing and the tech background. So yeah, so whether it’s a computer science background or just a huge aptitude for embracing technology seems to be the right DNA for, you know, the leadership of the roles and, and working within the role.

Jeff Pedowitz:

So you, you mentioned marketing ops as the merchant function. So do you see CMOs needing to run their teams and their, their departments more like a business?

Dave Lewis:

Absolutely, definitely. You know, I there’s been so much talk and so much pressure on marketing for as long as I can remember about being, you know, not a cost center, but a revenue center and driving revenue. And when you think about, you know, roles like you and I, as heads of our company, you know, we have to look at all the different disciplines of the business, customer service and marketing and sales and operations, all the different functions. And so when you’ve got marketing, leadership’s a CMO or a head of marketing looking at what they need to do in terms of marketing. They’ve got all that creative responsibility of the brand and the brand identity and all the marketing for the products and services the customer experience. But now they’ve got this responsibility for marketing technology. So if you think of it, as you suggested Jeff, as, as you know, bird’s eye view down on the org chart, you’re seeing this, like I said, it function and the creative function and the customer engagement function, all these different areas. It’s very much like a business organizationally, but also we have to be responsible from an ROI perspective. Here’s how much we’re spending in marketing. And what’s the impact of that that we’re having on the business. We’ve got to show that correlation to be able to grow and protect our budget.

Jeff Pedowitz:

We see that too. Definitely more and more marketers being held accountable for ROI revenue contribution to the pipeline. But you mentioned some of those other key departments. What are some of the other major KPIs you’re seeing executives be held responsible for it?

Dave Lewis:

If you’re talking, you know, marketing executives in terms of marketing measurement, there’s more talk than there is reality in terms of, you know, truly measuring marketing’s contribution to revenue. And that’s because, you know, if you think of both in the BTC area and B2B area in the B to C area where so many companies now digitally can, can look at from campaign to close, they have quite a bit of science because they can drive people to their website or drive people to e-commerce and take a look at the return on that investment, whether it’s a social media campaign or other channel and B2B marketing, especially ones where people are selling through the channel quite a bit more difficult. So got, gotta measure campaign performance. And I don’t mean at the tactical level, right. But actually, you know, if this is the spend of the campaign, what’s the ROI that you and I talk about that a lot.

When we talk about trade shows and other things that we’re doing in our respective companies, you know, what is the impact that these programs and these campaigns are having on lead generation or MQL generation and also revenue in terms of total ROI and marketing? I still think that’s challenging, not because of the tools, but because of the data issue, which, you know, companies like ours, mutual companies like ours are helping clients with, because if you don’t get the data, right, and the data capture and the data flow, all the chains from click to close, it makes everything a truly difficult. Yes.

Jeff Pedowitz:

Why do you think it’s so hard for marketers that everyone knows they have data problems, but they typically don’t budget for fixing the data. They just budget for getting more data. Why, why do you think that is? Why do you

Dave Lewis:

Cause they, they marketers hate data projects. I mean, I don’t mean all marketers, but I’m certainly the CMO and the heads of marketing, the people that are responsible for generating demand. They know they need to fix their data. They feel crippled by the challenges of not having the data, but they’re projects that really don’t get glory stories in the around the C suite. You know? So, Hey, we’re working on our data. There’s nothing really to show for that. There’s no pretty pictures. There’s no like the campaign experience. There’s no, you know, here’s our new campaign or here’s what we’re working on in marketing. It’s all under the covers, it’s behind the scenes. And so it’s not, it’s not an exciting project cause it’s not fun to work on it. And it really doesn’t have a direct output, a showcase that marketing is so used to, so it’s time it’s money and it really doesn’t get people excited with the output when it’s done, except for the results that it will bring.

Jeff Pedowitz:

I think that’s kind of getting worse though. Especially as more technology floods into marketing,

Dave Lewis:

It’s huge. There, there was a report. I can’t quote the source of it. I just know that I saw it at one of the recent conferences that, you know, in terms of stack of, you know, projects that marketers like to work on that the data project, 89%, which let’s just round that to 90% was saying, you know, that that’s 90% of marketers, don’t like working on their data. So it shows how much it’s ignored. However that is back to your question. That is the challenge with reporting that if don’t connect, as I said, those data chains, you know, if you’re running an inbound marketing program and you don’t capture the channel and the source and the piece of content when the lead is being created, then you have no chance later on taking a look back and saying, how did that campaign perform?

Jeff Pedowitz:

So what are some of the other processes? Do you find marketing departments struggling to implement, besides besides data integrity and governance? What would you say are the next two,

Dave Lewis:

Primarily the programs around aligning with other functions, mainly sales, you know I wrote the book a couple of years ago called manufacturing demand all about lead management and just came back from the serious decisions conference last week. There’s a lot of great education out there. A lot of great interest in aligning sales and marketing together and creating you know, an integrated process. A lot of companies struggle with that primarily because of culture or history of the departments not working together, sales really operating in terms of what was historically their own sense of lead generation and pipeline development and then marketing, creating campaigns and building awareness.

So that very top of the funnel was marketing’s former responsibility, but now as you, and I know like marketing’s got the responsibility all the way through the funnel and even behind. So for companies to change how they approach sales and marketing, working together, lead management is something that just, it’s not second nature to companies that have not been doing it, but it’s amazing when that happens, it comes together the productivity of sales and marketing really.

Jeff Pedowitz:

It goes up. So how how has sales changed? Do you think over the last 10 years,

Dave Lewis:

In terms of a discipline, some things are, are totally the same, you know, the, the science of selling whether you follow a methodology like Sandler or the challenger model or any of the different kind of tried and true approaches to selling that has not really changed. Neuro marketing and neuroscience has definitely helped sales teams understand more better on their messaging and the way to present content, you know, Simon Sinek, who I’m a big fan of you know, he always talks about starting with the why. And so there’s been big changes in terms of sales methodology all rooted in the same principles, but enhancements to being more effective in one-on-one selling the big change. Jeff Wright has been what sales his role is in terms of pipeline generation.

And, you know, before we had the web, before we had digital marketing tools, it was your sales team that had to go out with the brochures marketing was creating data sheets and demos and PowerPoint presentations for sales to generate awareness and move them through the different stages of the funnel. But today marketing plays the role of, you know, in most of our clients, I’m 60, 70% of the funnel is marketing’s responsibility in terms of lead generation and MQL generation and sales is providing more of that transaction.

Jeff Pedowitz:

So in terms of aligning with sales, though, whether some of the things that marketing is doing differently to not only get on the top of the line, cause it used to be just leaking and turning, right, getting a shared definition of a lead service level agreement. But you’re mentioning now they have to partner all the way through. So whether some of the other things you’re seeing marketing do

Dave Lewis:

Well, they’ve got to start the year aligning both around the revenue numbers. So they’ve got to have a revenue mindset. You know, you always talk about being a revenue marketer and what that looks like. So I’m going to throw the question back to you, but they have to, they have to start with a revenue mindset. So if a company wants to, you know, generate a net 20, 3,000, whatever, half a million, a half, a billion dollars of revenue, what is sales is responsibility and pipeline generation, what is marketing’s responsibility and how they’re going to work together. So starting with a revenue mindset is absolutely critical. And then taking a look at what they’re going to do, programmatically and resource wise to generate that revenue in the same way that sales was accountable for that. So if you were a, a sales leader and you had, you know, a dozen members of your sales team, you had a quota, have a quota for every one of those sales reps and their compensation is tied to the performance of that quota.

 So what we’re seeing today is marketing having much more of the same type of responsibility or responsibility for a certain amount of revenue and quota, and being tied to that and what I’ll end on. And I want to throw the question back to you is when will we, excuse me, when will we see marketing have the same type of compensation model and make the kind of money that sales is making, if we’re doing our jobs right. And a lot of our clients are, and they are driving revenue, forecasting revenue, and hitting or exceeding those goals, how come they’re not paid yet the same type of compensation levels that sales are. So I’m gonna throw up both of those parts back, right?

Jeff Pedowitz:

Those two good questions. So in the first one, I think that, you know, in a lot of ways, the notion of the funnel is a little antiquated because it still takes a, a company centric viewpoint. And really if you’re believing that the customer is at the center, that you’re trying to do a buyer centric type of approach, if you’re starting to get into account based marketing account based selling, then the customers in the middle, and then really it should be more, some type of loop, whether it’s, you know, it’s a figure eight loop or some type of something, but it’s more horizontal. It’s not necessarily about, I think, a magical force of gravity or certain things that move. And I, and I get it from a management standpoint, the funnel certainly makes it easier for organizations to manage, but it doesn’t necessarily do align you with, with your customer.

So I think regardless of how you want to draw your diagram, I think that you have to come up with a plan in marketing and sales have to understand their roles at every step of that plan or model. And there’s a set of discrete activities, functions and KPIs that you’re going to be doing now, whether that’s three steps, 10 steps, 55 steps, it doesn’t really matter, but as long as it, as it works for you. So I think and I think where people are getting it wrong, ABM is like, they’ve gotten it wrong with marketing automation is you can’t just buy technology. And now you have a strategy. You know, there’s a lot of work that has to happen with ABM and you have to have the data there. You have to have a good lead management model. Like how can you do account roll-up scoring, for example, if you don’t even have basic lead scoring, you can’t score buying center.

If you can’t score an individual if you don’t have good content in place, content operations, have you start building content for a target enterprise account, if you don’t have basic content. So I think that’s how I would answer your first question is that marketing and sales have to align. And the second, you know, even for the CMOs that are really nailing it and there’s a, there’s a few of them. I still think that there’s this cultural, I guess, predisposition to view marketing with some doubt because sales still walking in with the contract. And, and it’s always going to be somewhat questionable. So I think where marketing can site have control over a transactional models, e-commerce for example, or they can manage the inside sales team.

I would start there and try to get compensated for things that they can completely end to end, put their arms around where there’s not a third party that’s actually involved. And if they can build credibility there, then that should then extend into them. We are starting to see more executives get compensated, but we’re not necessarily, I mean, MBO is yes for marketing teams, but certainly they’re not, they don’t have a quota and then I’ll have an account target, but I, I I’m hoping it will be sooner than, than later.

Dave Lewis:

We definitely have started not started. We have seen compensation for marketing really increase. I know, especially in Silicon Valley. And so if people are watching this from other parts of the world, and they’re not seeing a compensation for marketing operations and for demand gen people on the rise that’s inconsistent with what I’m seeing. And I think the companies that are doing it really well, like you said that the best in class companies are fewer and far between them, they should be these days, but those that are doing it have really seen their incomes. Our client’s incomes have gone up and up and up every single year, but some of them are not quite at the chief revenue officer level.

Jeff Pedowitz:

No, but with our, hopefully with our help, we’re going to, we’re going to get in there. So as a, as one of the preeminent thought leaders out there and it closing thoughts, what would you advise your fellow C CML on how to approach transformation?

Dave Lewis:

How, how do I, how do I close on, on that one?

Jeff Pedowitz:

A whole other interview. That’s another 15 minutes, right?

Dave Lewis:

Yeah. That’s, that’s a, that’s a great session. Maybe we can do a follow on. I would say in terms of recommendations, if I was in the role today I would form a network of, you know, best in class marketers. You go to these conferences, right? And the people up on stage for the most part, those are the folks on stage. They’ve had great success and I would follow up and reach out to them. And I would build my own board of advisors as a marketing leader to find out what other companies are doing. Some of the folks I was with last week in Las Vegas at serious decisions. I told them, Hey, listen, you know, we have our customer events. Let’s make sure you guys get together and meet each other. You know, the, the shared knowledge, none of us are smarter than all of us type of mindset is really going to help companies know what technologies to buy, what not to buy. 

You know, there are brands that you and I hear about all the time, especially in, in tools, in the predictive space that are questionable impact and yet expensive. So if you can talk to other marketing leaders on a regular basis and find out what they’re doing and what they’re not doing or what they shouldn’t be doing that’s great advice. I mean, selfish plug for both of us, they should be working with an outside agency. You know, one of the things Jeff that I’ve share with our clients that seems to resonate if they hire somebody and that person has a resume, what do they have? Three, five, maybe seven different companies that that person has worked at and working with an outside agency, they have that opportunity to work with people that have worked with hundreds of companies and have seen the recipes of success and what doesn’t work so well. So networking, I think is the core of success. Having a great network of people and then leveraging outside resources like ourselves to help them be successful.

Jeff Pedowitz:

Great advice.

Dave Lewis:

And yours. Anything to add?

Jeff Pedowitz:

Thank you for sharing, Dave. Awesome having you on the show. Thank you so much for doing this.

Dave Lewis:

Thank you, Jeff. Good to, good to connect with you.

Jeff Pedowitz:

You bet. We’ll talk soon.

Dave Lewis:

All right, take care.

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