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Everything We Thought We Knew about B-to-B is Wrong Video

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In December, I had the opportunity to be the Keynote speaker at the Bowery Capital CMO Summit in NYC.  The event featured a number of high profile CMO’s speaking with an audience of mostly early stage startups (under 20 employees).

My presentation was based on the recent Forbes blog post Everything We Thought We Knew about B-to-B Marketing in Wrong.  The audience also included some local media, a reporter from CMO.com wrote a summary of the speech.

 

5 “Bigs” to Make Marketing Matter

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Do you think the senior executive team is excited about the big lead generation campaign you just launched?  Nope.  How about the number of “Likes” on your corporate Facebook page?  Think again.  Marketing doesn’t matter in many organizations, because it thinks, operates, and worst of all, reports “small.”

Executives sitting in the “C-suite” got there by thinking big, managing big, and reporting “big”.  Marketers commit hari-kari with this group by reporting tactical level activities – “minutia,” that garners no ones attention.  Do you think the head of sales is reporting the number of sales calls reps make a day?  No.  If you want to get their attention, you have to make marketing more important to them.  Here are five ways to go “Big.”

  • Big Bets – if you want marketing to be valued you have to understand, and link, to what the organization values.  It’s that simple.  If it’s market share, connect marketing objectives and activities to acquisition or/and account penetration.  If it’s profit, understand the drivers and align your teams’ efforts appropriately.
  • Big Strategy – once you understand how to link marketing to the business objectives your job is then to connect those big bets to day-to-day marketing activities.  Your smarts will be needed to take the marketing requirements from the product and sales organizations (which may be very tactical) and link them to the overall marketing strategy that aligns to the “big bets.”  Warning – this will require math, perhaps lots of it.
  • Big Plays – to execute, organize your marketing objectives as defined by your internal stakeholders into 2 or 3 “big plays.”  If market share is a key growth objective, a big play should focus on an area that has the greatest opportunity to do that…a specific market, product and customer.  All marketing activities/campaigns should be nested around that “play.’  Messaging is critical here because it is the “big play” wrapper that creates consistency in the communication across execution –think “Smarter Planet.” IBM discovered years ago that the best performing campaigns stayed in market the longest, and had the highest level of integrated tactics.  It takes focus and discipline to do, but if you can get there it will make your life easier by allowing you to organize everything under a big play umbrella, and if things don’t fit…then maybe you don’t do it.
  • Big Results – the first rule here is to understand that measurement and reporting are different.  Measure everything, but only report “process” or “results” metrics.  Executives care about “outputs,” not “inputs.” Inputs are activities, outputs are results, know the difference.
  • Big Balls – ya gotta have ‘em.  You are going to have to get comfortable with, and embrace risk.  If you do this right, you will be placing bets, that at the time, you will not know how, or if, they are going to pay off.  Years ago, I worked with a CEO that committed to double the size of the business in three years.  The CMO calculating sales cycles realized to support that growth marketing needed to double the number of leads that year.  She had no idea how she was going to do it, but it caught the attention of the senior management team, focused her team, and it happened. But as she learned, you don’t try to go it alone. Reach out to others with your plan, get their buy-in and support.  Level set expectations on timing and performance, it may require a significant investment in time and money for the “big bets” to pay off.  Set big goals, but be realistic in getting there.

The time for going “big” is now.  In Forrester’s recent B2B CMO’s Must Evolve or Move On report, 97% of marketing leaders who were survey agree with the statement that “Marketing must do things that is has never doScreen Shot 2013-09-22 at 5.09.56 PMne before to be successful.”

The other interesting, and important nugget from the research is that marketing is playing a bigger role in influencing corporate strategy, and other functions.  Make sure you’re capturing this opportunity at your organization by thinking, and by being — “Big”.

Why Sex Sells

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Original posted on Forbes July 25, 2011

Years ago some colleagues of mine built what we thought at the time was the “holy grail” of business marketing:  A sophisticated analytical tool that could tell a marketer where to invest, why, and what the return would be in sales productivity.   It could also tell them where to cut dollars, why and what the impact would be on the business.

It was an incredible feat of analytical modeling and technology.  Built for one of the most respected and well known companies in the world, so the CMO could answer with absolute certainty the CEO’s question: “What am I getting for my marketing spend?” We thought that it was our ticket to the big time and the rocket to ride to explosive growth, but that was not the case.

It turned out to be the only one we sold.   And that always baffled me.  Anyone who saw the tool was awed by its power and insight, but they didn’t buy.

Over the years, I picked up some clues as to why others would not buy:

  • The head of a major west coast based IT company warned us that our business intelligence tool and analytic model might limit his managers’ ability to make decisions based on their experience … “gut feel.”
  • The CMO of a global software company was concerned that our meticulously designed marketing processes, with stage gates and Gantt charts might limit his team’s creativity.
  • The head of marketing finance at a major Financial Service company told me that every year they run their marketing optimization model and it tells them that they overspend on TV, and under spend in print. But at the end of the year if there was additional budget leftover the CMO puts it in TV.

I’ve now been able to put the pieces together.  I came from a marketing science world and have since learned to appreciate and understand the value of the art of marketing.

Data and analytics can tell you where customers are, what they look like, what they’re interested in, but science alone can’t make customers buy.  It can’t make customers advocate for a brand, and it can’t make the hair stand up on the back of their necks.

Insightful, creative and relevant ideas that trigger human emotions can –  and do – sell.   For as much as I wanted to believe that buyers were rational creatures behaving in predictable patterns, I now understand that they are not.

Marketing, as much as we want it to be, is not an exact science.  Technology innovation has allowed us to better understand buyers, influencers and the performance of our activities.

But at the end of the day, business is personal.  We can’t remove the human element from the buyer or seller side.  Relationships and perceptions matter, how a product and/or a brand makes a customer feel is important, and it’s not easy to model or predict.

And with that, I found the answer: Although helpful and informative, good marketers don’t need to rely on sophisticated analytical tools to make decisions. Their experience, “gut,” and sometimes the hairs on their back of their neck do just fine.

5 Ways CMO’s Lose Credibility with the C-Suite

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This post was originally posted on July 8, 2011.  It also appeared on Forbes.com 

Here’s a hypothesis: Given the greater focus on ROI, marketing automation tools, and enhanced tracking of results, marketing is more of a science than ever. Therefore, marketers’ ability to defend and validate their value among peers should be easier than ever before.

So why does a recent study by Fournaise show that CMOs still lack credibility with CEOs?

The study points to several deficiencies with an emphasis on communication – are you sensing the irony?  Further, marketers tend to sabotage themselves in everyday interactions with the larger executive team, and in many cases, have no idea they are doing it.

Here are five common mistakes among marketers:

  1. Stumble explaining the value of marketing. Asked almost daily, and rarely answered properly. The key is to understand how the inquirer perceives the role of marketing. The question behind the question is “what is the value of marketing … to me?” According to the study, it most often relates to “revenue, sales, EBITA or even market valuation.”
  2. Limited product, service, and customer knowledge. Even the savviest marketer will arrive DOA in the credibility department if they fall short on this one.  And it is not about feature or functionality, but rather customer use and application that matter most and those factors vary by industry and size. Leave “speeds and feeds” to the product organization. Marketing’s job is to differentiate and develop compelling value propositions that sell. If products are built “inside-out,” then bring the “outside-in” perspective.
  3. Can’t Dance. Marketing comes with highly visible risk and things are going to go wrong. When they do, marketing needs to learn how to dance. Handling these situations will define how marketing is viewed. Keep best and worse case scenarios in mind when briefing the executive team. Truth is, if marketing isn’t making a few strategic and tactical mistakes, it’s not moving fast enough. As a former IBM client told me, “If you fail, and you will, fail fast.”
  4. Isolation. A favorite question from sales: What have you done for me lately? And the product team can be equally demanding. However, marketing has to build, nurture, and maintain strong relationships with these groups. For Sales, it is helpful to establish an integrated sales pipeline and hold weekly pipeline meetings; this will build rapport and create a common sense of purpose. It’s also an opportunity to put marketing metrics in a sales context. The key to a successful relationship with sales is about communication and performance. For the product group, marketing needs to clearly define points of integration for research, content, and value proposition development. The key to a successful relationship with the product team is about process and integration.
  5. Where to invest – or cut – an incremental dollar. This question is posed by the CFO at the end of the quarter when numbers are off, and by the CEO who wants to redirect budget.  It’s also used as a test. As a holder of discretionary dollars, marketing has to be prepared to answer “where” and “why” along with stating the business impact.  In talking about CMOs, 72% of CEOs say, “[marketers] are always asking for more money, but can rarely explain how much incremental business this money will generate.”

To call out the sense of irony, most of these issues are communication related. The same rigor brought to external communication needs to be applied internally:

  • Know the audience
  • Understand their needs
  • Communicate to them in their language.

While the Fournaise study states that executives think in terms of “revenue, sales, and EBITA,” most make judgments based on their emotions. Marketers are advised to use their creativity in delivering the message.

Friedrich Nietzsche said it: “All credibility, all good conscience, all evidence of truth come only from the senses.”

B2B Marketers Take Their Seat at the Table

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In 2004, I was part of research project with a professor at the Kellogg School of Management and the CMO Council that sought to understand what CMO’s believed to be critical for their success.  The most common response was a seat at the table with other senior executives.

Four years ago, I was part of another research effort focused on the CMO’s top priorities, and number one on the list was to be viewed by their peers as strategic thinkers.   Finally, I believe the day has come for that to happen.

Marty Homlish, the CMO of HP believes the line between business and consumer marketing is disappearing.  Homlish states,  “ Behind every B-to-B company is a consumer.  The way you communicate to that person is as an informed consumer.”

Technology has allowed work to follow us home and our home life to the office.  It has blurred the line between our personal and business personas.  The concept of being ‘at work’ is now more a state of mind rather than a physical location or particular time of day.

If business buyers – who were once thought of only as rational decision makers – now need to be communicated with as informed and emotional consumers who no longer fit our past perception of work hours and locations, what might this mean for the future of business-to-business marketing?

To answer that question, one must first understand the difference between how business and consumer marketing operate.  According to a Booz & Co and the ANA in The New B2B Marketing Imperative study, B2B marketing has primarily taken an “inside out” approach, focused on the needs of the company and accounts rather than customers.

By contrast, 85% of B2C marketers, who take an “outside in” approach said they were involved in growth initiative decisions which are considered to be strategic such as new market entry, customer relationships and market driven product development.

Additionally, 42% of B2C marketers play a key role in building customer relationships, versus 8% of business marketers.  B2B marketers said that “Customers are rarely driving the process and their input is seldom integrated from end to end.”

If today’s business buyers really are “educated consumers” as Homlish suggests, then business marketers can no longer be left out of customer and product  conversations.  It also means that organizations that target business buyers, who has given lip service to transitioning from being “product led” (inside out) to “customer focused” (outside in) now need to act.  And the tip of the spear for driving that change – is marketing.

By better understanding and influencing the needs, desires and emotional drivers of individual business consumers, marketers will be in the strategic conversation and lead the transition.  This is the key to unlocking the executive suite.

However, the organization is not just going to give marketers a seat at the table and there is a good possibility that executives don’t get it.   As one of the marketing directors said in the study; “Marketing is just not in the DNA of senior management.”  You will have to make it happen.

The study concludes that; “Core marketing capabilities – those that directly influence customers – have the highest correlation to market share growth.”  Senior executives may not understand marketing but they do understand growth.

How a CMO’s Background and Experience Impacts Tenure and Hiring

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Original post date February 27, 2009

My inbox is full of resumes of good marketers that I’ve been fortunate to come to know or work with over the years. Solid people, with great experience who are now having a challenging time finding new opportunities in this incredibly difficult economic environment. Many of these people could have had their pick of jobs as recently as last year. Given the situation, I thought I’d try to help by providing a viewpoint on what skills set, background and experience companies will be seeking once they start hiring again. I’ll use two data sources to make the case.

 

A few years ago, we teamed up with a professor (John Josephs)at Kellogg on a couple of research projects aimed at getting a better understand of what creates a high performance marketing organizations. Internally, we thought of it as the “head” and “body” studies because we first studied the marketing organization (the body) and then the follow year CMO’s (the head).
We surveyed not only CMO’s and marketers, but also CEO’s, about their views on what makes marketing effective. The research was then published by the CMO Council. Here are a few things we discovered along the way.
CEO’s view on how to measure marketings performance 

How CEO View Marketing Value and Performance

This information is a few years old now, but I can tell you that based on client work that the down turn has done nothing to change this, if anything, it has placed greater importance on the top 3-4 responses. Keep the top responses on these charts in mind as we move to the next section.

 

Last month, I was given access to a database of senior level marketers (SVP and up) to do some analysis for the organization that owns it. We looked at the background and experience of over 800 marketers with the following titles:

  • 50% were CMO’s
  • 32% EVP’s of Marketing
  • 8% SVP’s of Marketing
  • And interestingly enough 10% had CEO titles but had recently been the head of marketing

They came from large, medium and small companies including start ups:

  • 25% – Large (over $500M)
  • 32% – Medium ($100-$500M)
  • 23% – Small ($50-$100M)
  • 22% – Start up or under $50K

We were interested in assessing their area of expertise, experience and tenure.

Although executives with Product Management and Sales Enablement/Demand Gen experience represent only 27% of the total group, they represented a disproportionate amount of executives with the longest tenure. In fact, they were twice as likely (as a representative percentage) to be in the 2-5 years tenure category than those with Brand, Advertising and Corp Comm backgrounds. And they made up half of the individuals in the more than 5 year category.

Another interesting thing we picked up is that markerters in the NYC area were more likely to be new in role versus other regions (higher than average churn…probably attributed to a higher supply of talent).

Spencer Stuart has for many years reported CMO tenure rates (less than the life of a gold fish) but I’ve never seen them look at tenure by background…which makes a difference based on our assessment.

Finally, let’s look at Supply & Demand.

The Top 20 Advertisers in the US have been decimated. Think about…half of the Top 10 advertisers in 2007 were automobile manufactures. As a result, agencies have put hordes of people on the street.GDP in Q4 2008 is estimated to have declined by 6.2% from Q3 that declined by 0.5%. Revenues are down on average of 30-40% from the prior year in most firms (at least the ones we work with).

As a result, there are a slew of marketers with advertising, branding, and corporate comm backgrounds (73% of the database that we analyzed) in the market.

Let’s put it all together:

  1. CEO’s measure marketing effectiveness by revenue growth and market share
  2. CMO’s see the greatest need for new talent being driven by the integration of sales & marketing
  3. A large supply of “above the line” marketers exist in the marketplace

Conclusion- potentially high demand and a low supply of marketers who can drive revenue.  The marketers that will be in the highest demand coming out of the recession will be the ones who have been aligned or have had direct responsibility for growing revenue. Marketers that can speak the language of sales. Unfortunately, it will be a slow process for folks with a Brand PR and Corp Comm or the Ex-Agency/Media guys.Marketers with backgrounds in Product Management/Marketing who have owned a P&L, folks with sales backgrounds and/or marketers who can show that they can drive revenue/growth will be in demand first.

The challenge for the other groups is that of supply. It’s not to say that good Brand and Agency folks won’t find positions it’s that it’s going to be hard. Expect that you will be competiting with many other qualified candidates and it may be difficult to differentiate yourself.

CMO Council’s Design & Align Report

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Original Post Date April 23, 2007

The Define & Align the CMO report is avaliable to today after 2 years in the making. The report actually turned out to be more interesting than we orignal thought based on our working hypothesis.

The year-long research by the CMO Council and MarketBridge encompassed qualitative and quantitative interviews with CMOs, CEOs, board members, senior marketers and executive recruiters throughout North America. The 80-page report, priced at $295, along with a complimentary executive abstract, is available for download at http://www.cmocouncil.org/.

Here’s a teaser of some the insights coming out of the research:

  • Confusion over the role - the casualty rate of Chief Marketing Officers can be reduced if CEOs and boards better understood the role, requirements and value of a CMO and empowered the right individuals to architect all aspects of a company’s operations around the customer experience.
  • “A Fixer Upper” - the report points out that title inflation, unrealistic expectations, flawed hiring practices, talent deficiencies, and lack of requisite business and strategic leadership skills are big contributors to the limited shelf life of CMOs. The research also points to the fact that 50 percent of executive searches are to replace incumbent CMOs who are primarily hired to fix broken marketing organizations, not drive business value.
  • R-E-S-P-E-C-T - the study uncovers startling contradictions in upper management: most executives consider the CMO a valued member of the executive team, yet they also believe many CMOs lack the background and skills needed to be a top managementplayer – a challenge numerous senior marketers share with their CIO counterparts at many companies. Additionally, in a sharp commentary on the connection between strategic value and performance, most CMOs involved in top-level decision-making get high marks from their CEOs for their overall performance, while those CMOs who remain in tactical mode get significantly lower grades.
  • Show me the Money! - nearly three-quarters of the C-suite executives surveyed consider the marketing organization “highly influential and strategic in the enterprise.” At the same time, nearly two-thirds also say their top marketers don’t provide adequate evidence of ROI with which to gauge marketing’s true performance.
  • Getting a Grade - In a clear sign of the strategic role played by marketing executives, nearly 70% of the CMO respondents to this study report directly to their CEO. However, only 40% of that number get an A grade for their performance from the CEO…most likely the ones who could demonstrate their value!  For the most part, CMOs get more respect from the boardroom than from the CEO. Most of the board members surveyed, over 80%, believe that within the next two years, the CMO position will gain greater credibility with the rest of the management team. But in another reality check, less than 20 percent also say that an increasing number of CMOs will rise to the CEO position.
  • Longer Tenure - A majority of the recruiters surveyed believe that CMOs have a shorter shelf life than other C-level executives. The average tenure of CMO respondents to this study was 38 months. (In a past report, the search firm Stuart Spencer pegged the number at 23 months). We had a professor from a top business school involved in our research…he’s a data/analytics guru. He was also familiar with the Stuart Spencer report, here’s a dirty little secret…CMO’s your tenure is longer than what SS reports.  Don’t believe the hype…they are an executive placement firm.

The research concluded that the most successful CMOs are aggressively instituting rigorous performance measurement and analytics in every aspect of their organizations, and tying those metrics to revenue and profit growth.

The Downside of Performance Based Contracts

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Original post date November 29, 2006

The promise of a “performance-based” contract or a “risk sharing” agreement sounds so appealing on the surface but does it really live up to its lofty billing? Do customers really only “pay for performance”? And/or get what they are paying and if so, what does it take to make that contract work?

The Promise 
The concept has been around for many years and has been used successfully in the Public Sector and Health Care industries. Additionally, it has also been a very successful way to sell certain commodity products. More recently it has caught on with companies providing web and tele services.

Research on the prevalence of this pricing model shows that in marketing, online marketing services are dominated by “pay for performance,” especially in the area of search and advertising.

This trend is also carrying over to non-web based lead generation services like teleprospecting. With companies offering performance-based or risk sharing models, it seems like a good business decision when spending precise and sometimes hard to track marketing dollars.

But not so quick! It does sound good on the surface but read on to find out how it can go wrong.

At Risk” Contracts 
I recently had the opportunity to assess an outsourced lead generation program for a Fortune 500 company. The CMO of the organization was frustrated with the performance of the vendor and was close to terminating what had been a relatively successful 5 year relationship. Before that occurred, she asked me to assess the operation and the performance of the vendor, including the new Performance-Based Contract with an “At Risk” clause… recently forced on the vendor.

After visiting the operation and evaluating the program I concluded that:

  1. the vendor was actually performing exceptionally well given the situation
  2. the performance-based clause in the contract was causing counter productive business practices,
  3. the reason the vendor was not hitting their lead targets was actually the client’s fault and not the vendors.

The interesting part of the story that the CMO didn’t realize was that the vendor had 5 years of response data (by campaign, tactic and channel) including lead conversion rates by campaign type. The vendor also had very precise and predictable conversion rates for each stage of the pipeline. It was only a matter of flowing the right volume of responses from campaign activities into the top of the pipeline to create the number of leads needed to meet the target. All very predictable and a perfect set up for a performance-based contract, right?

Except there was one major problem…guess who was supposed to create the responses? That’s right, the CMO’s marketing team.  

This tele-qualification program was an inbound group that qualified responses coming from the client’s marketing efforts. Unfortunately, the client was not producing enough response for many reasons: under performing campaigns, inconsistent campaign activity with some months being totally dark, etc.

What is a vendor to do?
They start running their own campaigns to fill the gap because they don’t want to see their fees get hit. Here’s the not so funny part — their marketing campaigns start outperforming those of the client. Ha, Ha …the client is paying the vendor to follow up on their campaigns’, the only problem is that when they do the vendor loses productivity.

The vendor now doesn’t want to follow up on certain campaigns that it knows will be produce less than 10% response rates (because its own programs are producing 14%). Keep in mind the vendor owns 5 years of campaign response rate data it also can predict the lead yield from the client’s campaigns and so it begin to decline to participate in certain campaigns.

The vendor has now turned the tables on the client and is actually holding the client to its own version of a “performance-based” metric for campaigns, except it doesn’t tell the client that and it appears to the client that the vendor is now not only underperforming but also hard to work with because it doesn’t want to do certain things it knows are of low value.

Are you starting to see the mess?

Making it Work
First, create a real partnership with your vendor. Don’t put them in a situation where the performance clause of risking fees is used as a threat. A true “At Risk” model can be very appealing to senior management but may make the day-to-day vendor managers life a living nightmare.

If you decide to create an “At Risk” clause, be willing to add the “At Reward” clause as well. I’ve seen plenty of companies go for the fees at risk but balk at paying for performance that exceed targets. If you’re not willing to pay for the upside then don’t bother with the downside.

Finally, performance-based contracts can be a win for everyone just know that a vendor can’t do it all by themselves. It takes two to dance “the high performance dance” and if you’re not willing to do the “Tango” the dance can turn ugly. You start stepping on toes, tripping over each other and dancing to a different tune. I’m talking real ugly…think Jerry Springer on Dancing with the Stars.

How a Marketing Dashboard Can Bring Down Your Kingdom

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Original post date November 16, 2006

Yesterday I went on a bit of a rant about Performance Dashboards –let me tell you a story that will, hopefully, explain why.

Once upon a time there was a Prince named CMO and he lived in the magic kingdom of Marketing. The kingdom of Marketing was under attack from the kingdoms of Sales & Finance. The kingdoms were fighting over the “holy grail” of performance and ROI. So the Prince decided that he would build a Marketing Dashboard that would lead him to the Holy Grail.

The Prince commissioned a band of Knights called Consultants to lead the crusade and help him search the world for information. This journey was difficult and exhausted much of the Prince’s fortune but finally, the Knights built the Prince a magnificent and magical Dashboard…and the Prince was happy.

The Prince showed the Kingdoms of Sales & Finance his Dashboard and they were impressed. He told them that he was close to discovering where the Holy Gail of performance and ROI was hidden. Every month the Prince met with his people to talk about the Dashboard, and ogle at its magnificence but then, one day, something happened. The Dashboard started to lose its magic. The Prince and his people could not make it better and it steadily got worse; the Prince and the Kingdom of Marketing were very concerned and unhappy.

The Prince of Sales started to question the magnificence of the Dashboard and the power of Prince CMO. Prince Finance believed that the magic Dashboard was showing him how Prince CMO was squandering the wealth of his people. The Prince was under attack and eventually lost his kingdom.

The moral of the story is that a Dashboard is not the “holy grail” of performance and ROI. CMO’s are under a tremendous amount of pressure to show the organization how they are providing value and producing a positive return on what can be very sizeable investments (3-6% of revenues). CMO’s believe that they need to have the data to prove their case…and they are right. The difficult part is knowing what to do with the data once they have it, and how to move the numbers in the right direction. Although the story above is written as a fairy tale, it is based on a true story.

The most important thing that a CMO can do to improve the performance of marketing is teach/train country marketing managers the basics of pipeline management because it is their results that show up on the Dashboard. Effective pipeline management is built on four key principals:

  •  Volume – the flow of incoming response, leads, opportunity coming into the pipeline
  •  Conversion – the percent of opportunity that makes its way from one stage to another
  •  Cycle Time - the average time it takes for opportunity to move from one stage to the next
  •  Transaction Size – the average order size of the opportunity closed

If CMO’s can effectively coach their teams on how to manage by these prinicipals then they will have achieve the “Holy Grail”…and they will get to keep their kingdoms.