The best way to learn an industry is by way of an expert — someone with hands-on experience and successes in a variety of different organizations. Srihari Kumar is one of those individuals in MarTech.
Srihari is on a mission to transform the lives of marketers. Now on his third martech startup, ZenIQ.io, Srihari has a string of successful exits and award-winning products to his credit. Srihari tasted his first startup success when he was 3 months out of grad school. He joined a fledgling startup called VXTreme which got acquired by Microsoft for $100 Million. Srihari then founded Yodlee which went public, founded InMage (acquired by Microsoft), and founded LeadFormix which he sold to CallidusCloud.
LeadGenius recently sat down with Srihari Kumar to discuss marketing and sales orchestration, the importance of actionable B2B data, and the fate of the MarTech industry.
How did you get your start in marketing and sales tech?
[Srihari Kumar] I dropped out of a PhD in computer science from Washington University, St. Louis and though I had offers from larger companies, I started my career as an employee of a startup.
At the time, people warned me, “hey, don’t go to a startup. It might go belly up.” My advisor said, you know, “I’m not sure you’re making the right decision after all this hard work and education. You’re going to waste your education. You have offers from great companies, and you’re throwing it all away to join a startup?”
Well, I just couldn’t resist it.
I went and joined a company called VXtreme — the first company to do streaming video on the internet. VXtreme was a great experience, because within three months of my joining, we got acquired by Microsoft and we were all treated so well by them I thought, “Hey, this is the life. This is the way it should be,” right?
Ever since I’ve been doing different startups.
The first startup I founded was Yodlee. We actually started out as more of a consumer startup but pivoted into FinTech. That paid off. That was IPO.
After that, I did a systems startup. It was in the backup space. As an engineer systems guy, I was more interested in this area.
I accidentally stumbled into MarTech when I started a company called LeadFormix, which started out as general web analytics, then web analytics for sales, and then marketing automation. Our customers drove us, which is the best way to have arrived in marketing automation.
What I did not realize at that time was that, if you are in a good market, all your sins are forgiven. You don’t have to do everything right, and you can still be successful.
If you’re in a bad market, you can put all the horsepower, brain power, and purchasing power you want into doing everything right and you may still only be modestly successful.
The journey I began in 2009 led me to ZenIQ where we’re actually realizing the early dream of marketing automation – using machine learning and AI orchestrate marketing — that’s the next level of marketing automation: orchestration.
What do you see as the state of affairs in marketer’s world?
In the late 1990s and early 2000s, marketers had to share a system with sales: a CRM system. In the late 2000s and early 2010s, marketers got their own system, the marketing automation platform. In the past 5 years, marketers have gone from having their own system to their own toolbox.
Now, you might wonder, what’s next?
Given that all these different marketing technologies are somewhat disjointed — they are not, themselves, necessarily part of a unified system — I believe the next big step will be to orchestrate intelligently across marketing functions using a “marketing orchestration platform.”
We’ve moved from CRM to CRM+ MAP (Marketing Automation Platform). Now there is going to be a third core system, the marketing orchestration platform, which is coordinated across the entire martech stack.
When it comes to the measuring success of the orchestration, what are some of the things marketers are doing well, and what are they missing out on? What will the evolution of “orchestration” allow them to do?
Traditionally, marketing has been very hard to measure. We all know the quote attributed to John Wanamaker: “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.”
In the last few years, we have made tremendous progress in measuring even something like display ad success, which has traditionally been very hard to measure.
So, we’re able to now measure most marketing activities now, if not everything. That’s a big deal.
Another big component of measuring orchestration is drilling into your ideal customer profile (ICP).
It’s very important to distinguish between the total addressable market (TAM) and the ideal customer profile. An ICP is a subset of the TAM. (?)
The first question you should ask is,”how big is my TAM?” Then, what percentage of the TAM is composed of companies meeting the ICP? Of that, what percentage has been penetrated in some way? What is the level of brand awareness within the ICP? From there, you measure the level of engagement at an account level.
Typically B2B marketers are using a half dozen different channels to target a half dozen people at target accounts.
Given the recent explosion of available channels to reach different people in the buying center, measuring engagement is a significant challenge. The concept of “engagement” is important because B2B sales cycles are longer. It’s very important to be able to say whether engagement is increasing or declining. Engagement is a precursor to a real opportunity — something that sales can pursue. Even after an opportunity is created, marketers can increase the engagement to help the deal move forward.
Your distinction between TAM and ICP is interesting. Do you find most prospects you’re working with talk about those as if they’re synonymous?
Most people use them synonymously, but the distinction is important. TAM is who you want to sell to. ICP is where you actually win today.
If you are giving big discounts, for example, that may be telltale sign you’re not selling to your ICP. You’re in your TAM, but not your ICP. Your ICP is your sweet spot. It’s where your win rate should be highest. When you sell to your ICP, you do you not have to do “unnatural” things in order to close the deal.
Here is a simple example. Let’s say there is file sharing company, like Box. Their TAM is pretty much any company that needs to share files. But, their ICP may be a company that’s very conscious about security. Their win rate will be much higher with the latter. That’s the difference.
You’ve called marketing and sales operations a power couple. What role do those two play in successful orchestration? Why are marketing and operations the power couple?
The power couple is Demand Generation plus Marketing Operations. The reason we call them a power couple is, traditionally, Marketing Ops has wired campaigns together, and DemandGen focused on running the campaigns. It’s very important that they both work towards making the marketing stack successful.
Marketing Ops is the left brain and DemandGen is right brain — the analytical versus the creative. You need both in order to be successful. We call them the power couple because companies tend to focus on one or the other.
Like people, many companies are either left-brained or right-brained. Accordingly, companies tend to either invest heavily in just the DemandGen piece or invest heavily in software.
A lot of people tend to think, “If I just buy technology, my problems will be solved.” But, usually, tech by itself does not solve a problem. There’s always a human element to problem-solving.
In the marketing automation world, people say, “Oh, I bought a marketing automation system. My lead nurturing problem is solved!” There is no shortage of companies that have realized the hard way that buying the technology was only the first step. You need a human to figure out those ‘25 node workflows,’ lead nurturing strategy, workflow templates, creative, calls to action, messaging, audience segmentation. Human intelligence is critical to success with any marketing and sales technology.
A lot of industry influencers muse about the state of the marketing and sales technology landscape. But what about the state of the *data* landscape? What do companies need in order to have actionable data for orchestration?
The data landscape has matured quite a bit. Companies are finally seeing the need to go beyond the basics: contact data, firmographics, demographics, etc.
Marketers are also starting to understand the need to regularly update stale data. Companies are realizing that they need to make use of fresh data in a timely manner in order to see results.
You can never go in with an assumption that any data source is perfect. You need to put steps in place in order to make sure you filter out the noise and take only the signal. If you’re able to do that in a timely manner, you will be able to show results.
We’re now seeing new types of data services come online that are taking “unstructured” data and turning it into actionable information. For example, monitoring online news services and press releases or tracking company-specific hiring trends.
We’re seeing more sophistication in the average B2B data buyer, so it makes sense we’re also now seeing more sophistication in data services.
When we talk about orchestrating ABM we’re talking about targeting the right person, at the right account, and the right person, with the right message, at the right time. It’s simple at first blush, yet so many companies miss the mark. What are some of the things businesses frequently get wrong about ABM?
The first mistake companies make is not understanding how decision making panels operate at different market tiers. The number of decision makers a company needs to engage with in order to close a deal varies. For example, in the 10,000+ employee range, you need to engage about 23 people before closing. Compare that to the 1000-5000 employee range, where you might need to only engage 8 people. That’s a big difference.
The second mistake marketers make is not considering how different channels and content are used by different decision makers. In one case you might find that webinars perform better for HR managers at big companies but in-person meeting works better for VPs of HR at small companies. In both cases, you’re selling this same product. There is no one size fits all approach to content and channel mix.
The third mistake is that people don’t change the tactics that are not working. All the time, I see companies send out marketing emails and, even after the seven emails there are no opens, there was no attempt to actually look at the data and say, “Let’s try a different channel.”
On the flip side, companies need to experiment with new channels at a small scale more often and be ready to scale those up.
Orchestrating an effective ABM program requires stakeholders from different departments. How can a champion of account-based marketing overcome some of the organizational hurdles that exist for deploying an effective ABM strategy?
The first thing a champion of ABM should do is start with what they can fix in their own department.
Another simple thing is fixing your data — simple stuff: making sure you measure engagement for current, past, and prospective customers.
When fixing your data, you will inevitably find new people to add to your existing campaigns.
Once you show success, the next thing is to enable your sales team. If you’re a marketer or DemandGen person, you have an SDR team that needs to be fed. You need to find more efficient ways to supply them with meaningful contacts.
What is the sweet spot in between defining a large total addressable market and a very granular ICP? What are some indicators you’re either too broad or too narrow in your ICP definition?
Having to offer discounts is one indicator you are fishing outside your ICP.
Another indicator is sales cycle — if it’s unpredictable or predictable; if it’s too long or too short. Predictably is more important than anything else. The sales cycle for your ICP may actually be longer than the sales cycle for your TAM outside of your ICP. You’re aiming for predictability over the duration.
Another area where you want to be predictable is with your win rates.
When working a limited number of accounts at a B2B company, statistically significant data can be hard to come by. How do you know what to change and when? What proxies do you recommend companies look at various stages of the sales cycle?
The good news is, though the number of accounts you work may be small, the number of activities going on is large. If you combine all of the different activities across different channels, it goes in the tens of thousands, even for a modest-sized company.
Rather than just looking at closed deals for your ICP, look at pipeline velocity metrics. You should also look closed lost deals.
You’ve sold prior companies to strategic investors. What’s your take on these private equity folks that seem to be getting very excited about MarTech, SalesTech, and AdTech data? You have Spectrum buying RainKing, only to then sell to DiscoverOrg. You’ve got Vista Equity taking a bunch of companies and bundling stuff into Marketo. You have Clarion Capital buying Madison Logic in AdTech. What’s private equity’s interest in our space right now? Has it always been the case? Is something going on?
Someone is going to build a large martech company by rolling up all the different technology pieces synergistically. Once the trailblazer (either a strategic or a private equity firm) shows how to do it, there will be a number of followers. There is a maturation going on with MarTech itself. I think we’ll see a lot more strategics come onboard in the coming months and years.
Final question: What’s going to happen in our space that most people don’t see coming?
The first thing that’ll happen is massive consolidation. In the next 12 months, we’ll see lots of good companies and good products get acquired and others go under. There will be lots of turmoil.
That will be followed by a feeling of disillusionment. We are seeing it in marketers themselves right now. They’re tired of getting hit with technology after technology after technology.
Following all this will be a new wave. The marketing automation of today is really the second wave of marketing automation companies who succeeded. The first wave did not.
The current landscape will shrink in terms of the number of companies. Then, we’ll see a massive category blossom. In the meantime. It’s going to be a bit of a rollercoaster.