Sam Donaghey
Welcome to the Fast Slow Motion Podcast, where we teach you how to build a business you love while enjoying your life. I’m your host, Sam Donaghey. And in today’s episode, we’re in for a great conversation between two incredible business leaders, Fast Slow Motion’s own Chief Growth Officer, Eric Housh, as well as our very special guest, Shiv Narayanan. Shiv is the founder and CEO of How to SaaS, a leading marketing strategy consulting firm.

He’s also the author of two bestselling books, Post-Acquisition Marketing and Exit Ready Marketing. Shiv has got an impressive track record of helping private equity investors and CEOs create hundreds of millions of dollars in enterprise value through marketing. So Eric and Shiv, welcome to the show.

Shiv Narayanan
Excited to be here. Thanks for having me on.

Eric Housh
Yeah, thanks for having us, Sam. Shiv, I’m a huge fan. I’m super excited about digging into this content for our listeners today. We’re going to talk marketing, and specifically I want to hone in on something I heard you touch on at Silicon Yall, which is the four most common mistakes businesses make when it comes to marketing and how to address those. But first, you said something in that talk that I think our listeners would really love for you to unpack. You said, everything is marketing. What do you mean by that?

Shiv Narayanan
Yeah, I think one of the things that often happens inside businesses is marketing is looked at as like the ugly stepchild or just an afterthought inside companies when you’re thinking about how you’re planning your strategy, your go-to-market, even your products. And when you actually end up taking that product to market, customers are not as responsive. And what I find inside the best companies is marketing is the source from where you understand the end customer’s needs. And that information is then used to inform all other departments of the business and how we position the business and how we communicate that to the market. And that ensures that the likelihood of success is a lot higher. And so I think it’s more of a dynamic shift inside companies that needs to happen where instead of looking at marketing as this kind of side project, it is actually the entire business because how you go to market actually should inform what products you’re building in the first place in your overall company strategy.

Eric Housh
That’s absolutely spot on and I love that concept, that sort of framework. Let’s get into it because marketing is often seen as this side project or this thing that maybe a couple of people do. A lot of us get it wrong. And there are four main mistakes that you say businesses make when it comes to marketing. That’s having the wrong strategy, the wrong focus areas, the wrong budget allocation, and the wrong team structure. So let’s start at the top. Let’s start with strategy. What do you see there? How do we get that so wrong?

Shiv Narayanan
Yeah, I think one of the big things inside companies that is misunderstood is, what is the context we’re operating in? And you can’t really figure out what’s right for your business until you understand the specifics of the company that you’re actually trying to market. A great example of this is what is your average deal size? So the larger your average deal size in general, the smaller the market that you’re often going after because very few people can afford, let’s say, a $500,000 product. If you’re selling to some of the biggest hospitals in the country, the number of hospitals is much smaller than if you were selling a general medical device that applies to consumers and has a lower price point. And so based on just that context alone, certain channels become more important versus others. And if you follow a lot of marketing experts or read books or certain blogs or even follow webinars or go to conferences, there’s an ongoing narrative and content marketing machine, if you will, of everybody kind of pushing their own agenda or their own book of business, right? So if you’re HubSpot, you’re championing Inbound. If you’re Sixth Sense, you’re championing account-based marketing. But you as the business leader, the strategic leader, need to think about which one of these things is more relevant to me. If you are going after only the 600 biggest hospitals in the country, then you should actually focus on more of an account-based approach because each account might be worth half a million to $2 million to you. On the flip side, if you’re selling more of a direct-to-consumer medical device that applies to all consumers, now things like SEO or YouTube videos end up becoming a lot more important to you.

Eric Housh
Yeah, you told the story about the company that was really proud that they had all of the SEO around their market, but that’s not even how their buyers buy, right? So just getting it wrong at that fundamental level, I imagine, happens a lot. So let’s segue to the next problem that we see a lot of businesses struggle with when it comes to marketing, and that’s around focus areas, getting the wrong focus areas. Unpack that a little bit for us.

Shiv Narayanan
Yeah, so connected to the strategy and the context — and we just touched on pricing and size of market, but there are other things that we can think about. Also things like how much are you doing in terms of revenue? Who is the exact customer? How much cash do you have on hand? As you start to understand all of these components and how much you have to invest into marketing, then you can start to think about where you should deploy that budget.

And that’s where focus areas become important. A really good exercise I like to get companies to think about is: if you had an unlimited budget, what are all the possible avenues that you would explore for deploying that marketing budget? Then let’s make a prioritized list based on the highest ROI items to the lowest ROI items. Now add in the constraint of budget and figure out how far down that list you can actually work. Doing that exercise is actually kind of liberating because it allows you to explore all the possible areas that are available to your business. And then when you add in the budget constraint, it becomes very obvious — we shouldn’t do items five through ten because we only have X amount of dollars to invest into our marketing efforts. And what I find inside a lot of companies is that they will do, for example, item number two and item number eight and item number five and item number nine, instead of doing items one, two, three, and four, where the most amount of value exists for that business. So going through an exercise like that, along with understanding that business context and really building the right strategy, can go a long way to making the biggest amount of impact with the lowest amount of budget.

Eric Housh
I want to double-click on something, and we’ll get to budget allocation. That’s another problem that a lot of people just get really, really wrong. But one thing I heard you say in a previous talk, which I found fascinating, is you said that the best-fit customers are actually cheaper to acquire. Why is that?

Shiv Narayanan
Yeah, this is one of those counterintuitive things, right? Because in any market, most markets over time become more commoditized. Even if you have a differentiated position, what you offer in a market, there will be a competitor that offers something at least similar. And so it’s very important to know which types of customers you win with the most and where you are able to deliver the most amount of value and where they are the happiest in terms of transacting with you, working with you. Do they refer you to their friends or colleagues or other customers that can also benefit from you? And as you start to understand who those people are, you start to realize that those people have better metrics across the board. They’re better at registering for a demo. If they come to your website, they probably have better demo show-up rates. They have better demo-to-opportunity rates. They have better opportunity-to-close rates. And then they have better retention rates and better lifetime value and better NPS and better referral rates, just because they are a better fit for what you have to sell.

And if you parse through the customer database of every company, it’s almost like an 80/20 or 90/10 rule where 20% of the customers make up 80% of the value your business generates. And so it’s about figuring out where does that 20% live? Is it a particular vertical? Is it a customer segment? Is it a specific industry? And focusing all your marketing investment into that segment. What happens inside most companies though, instead, is they kind of do this broad-based marketing approach where instead of 80% of their budget going into those 20% of customers, it’s equally divided amongst best-fit customers, medium-fit customers, and worst-fit customers. And you actually want budget concentration on those best-fit customers because they have those higher conversion rates — you’re going to have a higher return on all of the investment that you’re making in your marketing efforts.

Eric Housh
And they’re going to stick around, right? Your lifetime value is going to be through the roof. We’ve recently done this exercise at Fast Slow Motion and really it’s looking at your existing customer base — like who’s paying you, who values you, where are you killing it — and leaning into the channels that get you in front of more of those folks. So really sage wisdom there. Let’s talk a little bit more about budget because it’s hard to get it right. What do you see companies get wrong and where would you coach them to look at their budget in a different way?

Shiv Narayanan
Exactly. Yeah, I think first, thinking about the right strategy. As we talked about, as you determine the best channels, understand the context, understand the best-fit customers, are you deploying your budget in the right avenues to target your best-fit customers and parsing it through different filters? One can be at a channel level, and as you identify which channels are less relevant versus more relevant, is more of your budget actually going to those channels that would be more relevant? So channel level for sure — then thinking about it from a geography standpoint or customer segment standpoint or customer size standpoint or vertical or industry standpoint. As you start looking at all those filters and layer them on top of each other, it becomes kind of obvious how you should actually allocate your budget versus how companies are allocating it now.

And I can tell you just from personal experience, whenever we come into a company and we audit their business, we find at least 20 to 50% inefficiencies, no matter what the size of the company is, whether it’s a $5 million business or an $800 million public company. We always find that much inefficiency just because nobody’s actively looking at budget efficiency and allocation on an ongoing basis. Budget is kind of treated like an annual exercise that you do with the finance team. And once you do it once, then the next year is kind of like, oh yeah, we’re going to just put in the same thing that we did last year and maybe 10% more. And before you know it, it’s been three, four years and a lot of the things that used to work don’t work anymore, and nobody’s actually keeping track of efficiency all the way through to revenue.

Eric Housh
So Shiv, so far we’ve talked strategy, we’ve talked focus areas, we’ve talked budget. Obviously we could go super deep on all three of those. We don’t have a lot of time to go into that, but I want to be sure to hit on the last one because I know a lot of companies struggle with this concept of team structure. What should the marketing team even look like? I bet you see a lot of companies that have one to two marketing folks who are kind of jacks of all trades and maybe they hire some agencies or whatnot. What do we get wrong when it comes to team structure, and how would you suggest companies think about this differently?

Shiv Narayanan
Yeah, I’ll give you two different types of mistakes. The number one mistake is that companies have the wrong marketing leader. And I can tell you that it’s very rare for me to come into a business that is struggling or has more marketing potential that has a great marketing leader. It’s probably like one out of 10 companies that I find. And when I say great marketing leader, it doesn’t mean that the person’s not capable. It often means that we have the wrong person for the context of this business.

And so having the right type of marketing leader for the stage of company that you’re at, for the type of work that’s required from the role, and the expectations that the board or the CEO might have, and the budget that you have available to deploy, and the resources available to that person — it all makes a huge difference. One example of this would be, let’s say you’re a smaller business around $5 million or something in that range, but you hire a former CMO of a $200 million company. You think you’re getting an amazing hire because this person has been part of a huge company. And then they come into your business and they’re expecting resources at the level of the $200 million business. But your business just doesn’t have that. You need a CMO that can also execute and understands all the nuances of execution and getting the right people to do the right things on a day-to-day basis. And that $200 million CMO is more used to monitoring dashboards and having board meetings and things like that.

And the reverse can also be true. If you have a $5 million CMO in a $200 million company, you now have a situation where the person has a bias for execution when they really need to be good at managing expectations, communicating with the board, securing more resources, being good at hiring and retaining talent, and all of those skills. So I think getting the right CMO for your business is probably one of the most important decisions you will make because unless you have a great CMO, the CEO is the CMO. And when I say the CEO is the CMO, it’s critical decisions like: what is our position in the market? What is the story we want to tell? How do we differentiate ourselves? Where do we differentiate ourselves? And how do we deploy our budget?

And then the second mistake or issue that comes about from this is that, let’s assume we do have the right CMO — because marketing is kind of like this afterthought inside companies, it’s often under-resourced. And again, I’d say nine out of 10 companies are under-resourced on the marketing side. That’s why we have a business and why we believe so strongly in our thesis — because companies are not investing enough into marketing, they might miss their sales projections, but then they misdiagnose the cause of missing those projections. For example, you might have five reps that miss quota out of your 10 sales reps. And the most immediate thing you might do is replace the five sales reps with new sales reps. And you will have the same problem. The average tenure of a VP of Sales is less than 18 months. Same thing with a VP of Marketing. And so what you actually need to do is recognize that revenue is actually a shared problem between marketing and sales. And if marketing is under-resourced — and by under-resourced, that could mean lower budgets, lower channel spend, not enough team members — we see this all the time. We’ve seen hundred-million-dollar companies with a marketing team of less than 10 people. If you have less than 10 people, you really cannot do the kind of sophisticated marketing that needs to be done for a company at that level. So it’s really understanding what is the right-size team, right-size budget, right-size strategy, right-size spend, and right focus areas. They’re all connected, and the CEO and the board really need to understand what that looks like for their business and then start to implement.

Eric Housh
I want to leave our listeners, Shiv, with something actionable. And in this talk at Silicon Yall, you talked about this pyramid of sophistication and how to evaluate your current marketing operations and identify areas where maybe you could be creating more value. Would you talk us through that pyramid, if you can, and how companies could approach that framework?

Shiv Narayanan
Yeah, the pyramid of sophistication is something I built a few years ago as we were advising a lot of these companies and I started to see the same types of problems emerge. Just for some context — and I’m sure your audience faces this too — when we meet companies, the CEOs are often coming to us with the same problem, which is that they want more leads, and they want them yesterday. The problem is that most companies are not set up to be able to generate more pipeline and revenue from marketing efforts because they haven’t done some of the foundational work. And so the pyramid of sophistication explains what that work is.

Layer one is your foundational work that every company needs to do. It’s your TAM and segmentation — understanding who your customer is. Then it’s your product marketing work, which is how do you position yourself and differentiate yourself. Then it’s your sales enablement work, which is how do you enable the sales team or through self-serve to help customers make buying decisions. And then overall, what’s your go-to-market strategy, some of which we touched on earlier.

The next level is your programs. This is your demand generation, your content, and your customer marketing. And this is how you generate revenue from new and existing customers on a programmatic basis that is repeatable and scalable. A lot of companies don’t have this. So building that out from scratch, step by step — or if you’ve done some of it, how do you scale it to the nth degree — needs to be figured out.

And then the third layer is resourcing. Here I have revenue ops and team and budget. Revenue ops is super important here because we need to measure what’s working and what’s not working. And if we haven’t deployed enough budget to date, at the very least have the right infrastructure to measure what is the return on our marketing spend all the way through to revenue. And then use that to inform what team and budget we will need in order to scale this thing. So let’s say your marketing budget today is $350,000 — it might turn out that the right-size marketing budget for your company is actually closer to $700,000. And you kind of have to figure out how that divides up between programs and headcount and what the ROI needs to look like.

What happens is when we meet companies, if you were to scorecard yourself in all of these boxes out of five, it’s very rare to meet a company that is a four or five in all of these boxes. And in a lot of cases, if CEOs were being really honest with themselves, there would be a zero out of five in a lot of these boxes. And so what you want to do is start at the bottom layer and work your way to the top of the pyramid as quickly as possible. And that is what enables revenue growth to happen. Like anybody can turn on Google Ads tomorrow and get leads, but those leads will not convert because you don’t have some of the fundamental pieces in place. And so that’s what we are constantly educating the market about — that to build a business that lasts and has predictable revenue, you need to fill out all of these different areas of your entire go-to-market engine.

Eric Housh
Shiv, I feel like we’ve just scratched the surface today. You’re such an incredible resource when it comes to marketing and scaling marketing operations inside companies. There’s so much more we could get into, but we just don’t have the time. Where can listeners engage with you to continue learning? I know you’ve got the podcast, you’ve got the newsletter, all those fantastic resources. Where can they go on the web to connect?

Shiv Narayanan
Yeah, I’d say two specific resources to check out. One is just on our website, www.howtosaas.com. And then get my latest book, Exit Ready Marketing, which walks through a lot of these things. I think any size business can learn a lot from that. And even if you don’t ever end up working with us, I think that’s a great resource. And just personally, on a personal level, connect with me on LinkedIn.

Sam Donaghey
Well, Shiv, thank you so much for your time. Before we wrap up, we always like to ask our guests for a piece of advice or a quote that’s inspired their journey. So do you have something that you’d like to share with our listeners today?

Shiv Narayanan
Not a direct quote, but I can definitely recommend an additional resource. A book that I’m a big fan of is Blue Ocean Strategy. I think a lot of businesses should think about marketing in that context, which is how do you create a position for yourself in a marketplace that is differentiated, where you’re not always competing on price. And I think that book does a great job. A lot of the stuff that I talk about connects with that book and a bunch of other key books out there. So I would recommend that resource.

Sam Donaghey
That wraps up today’s episode of the Fast Slow Motion Podcast. Thank you to Shiv for sharing your insights on how to avoid four of the most common mistakes in marketing. For our listeners who want to learn more about Shiv, as he mentioned, you can go to HowToSaaS.com. And remember to subscribe to the podcast on your favorite podcast platform, or you can check out past episodes at fastslowmotion.com/podcast. And as always, you can send us your questions and comments at fastslowmotion.com/podcast-feedback.

Shiv Narayanan
Awesome, guys. Thank you. This was great.