PROVING YOUR VALUE
Mark Stouse, Founder and CEO, Proof Analytics
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Welcome to the seventh episode of The Storied Future Podcast, where Chris talks to Mark Stouse, founder and CEO of Proof Analytics.
If you’ve been listening to the show regularly, you know we explore how leaders use narrative to transform the future of a business. Mark has done that many times over, but his story of personal transformation is not to be missed. He also highlights how analytics can be a powerful tool—an empathy engine—that can help marketing leaders become greater multipliers of the efforts of those around them.
In this episode, Chris and Mark discuss:
- How the thing Mark detested at an early age—math—eventually changed his life
- How Mark proved the value of investing in brand building at Honeywell Aerospace, a traditional organization that had historically spent nearly 100% on demand generation
- The roles of marketing and sales, how marketing mix modeling helps align them, and why great marketing is a sales multiplier
- Why understanding time lag is a key to proving the impact of your marketing investments
- The narratives that guide the relationship between CMOs and CFOs, and how analytics can help shift those narratives
And much more!
007 Mark Stouse: Proving Your Value
Mark Stouse 00:00
Analytics, if you look at it as a coach and not a judge, it will make you a better person. It will make you a better marketer. It will make you more empathetic to everybody else whose efforts are represented in the analytics.
Welcome to The Storied Future Podcast with Chris Hare, a show that provides the knowledge and inspiration C-suite leaders need to shift the future. Hear from experts, innovators, and purpose-driven leaders who have harnessed the power of strategic narrative to create lasting change.
Chris Hare 00:33
Hi, and welcome to The Storied Future Podcast. I'm Chris Hare, and I'm glad you're here. Each episode I talk to C-suite leaders, experts, and innovators who have created new narratives that change minds, change behavior, and change the future. Earlier this year, I hit a wall. I was tired of seeing our clients being told that they had to demonstrate their value, but not being given the tools to do so. I was tired of seeing companies making short-term decisions to drive demand that were harming the long-term value and impact of their brands. I was tired of seeing disconnects between marketing and sales. I was tired of seeing campaigns that didn't align to business strategies. And I was tired of seeing C-suite leaders making gut feel decisions and making investments driven by fear and ineffective narratives. One afternoon, I was feeling especially stuck, looking for ways to break through the wall or just jump over it. And that's when I came across a presentation from today's guest that addressed the exact challenges I was grappling with. So I reached out, scheduled a call, and was struck not only by his deep knowledge and expertise, but also by his empathy and his willingness to walk with me through some of the challenges that I was trying to solve. That is rare in today's world, and it kicked off a friendship that I hope will continue for years to come. I'm really excited to be joined today by Mark Stouse, an enterprise CMO and CCO turned analytic software CEO. Mark currently leads Proof Analytics, a company that helps C-suite leaders prove the value of their marketing investments. They offer the only MRM (marketing resource management) solution native on Salesforce, and the only automated GTM analytics solution, which is a super modern version of the long-proven marketing mixed modeling system developed by P&G. Prior to founding Proof, Mark was CMO at Honeywell Aerospace. During his time at Honeywell, Mark deployed extensive sales and marketing analytics to calibrate and establish marketing's contribution to sales productivity. This led to a year-over-year cash-to-cash return on marketing investment that exceeded 900% globally. He and his team also drove improvements in organic deal expansion of more than 40%, and improved pervasive deal velocity by 4 to 5%. Mark is probably one of only three to four B2B CMOs who can say that. That's why Proof exists, and it's one of the reasons that we're talking with him today. In this episode, Mark talks about how he hid his true personality and gifts as a kid to gain the acceptance of others, a trend that continued into early adulthood. He talks about how he tried to prove his value as a human being and his impact as a leader until he eventually went through a massive transformation in his own personal narrative that came from an unlikely source. We explore the lag time between making marketing investments and delivering measurable impact. We delve into the traditional narrative about the CFO-CMO relationship and explore how marketing leaders can earn the trust and partnership of finance. And finally, we talk about how C-suite leaders can prove the value of the marketing investments now and into the future. Let's dive in.
Mark, thanks for joining us on The Storied Future podcast.
Mark Stouse 03:41
It's great to be here. Thanks so much.
Chris Hare 03:44
I wanted to start out if you could take us back to when you were a kid. I'd love to hear a little bit about kind of what you were like growing up and what captured your imagination.
Mark Stouse 03:54
I think that I was kind of a classic nerd, right? My best friends were, at least for the, like, first 10 or 12 years of my life were books. And I kind of grew up with a secret desire to be who I was, and yet different in terms of how other people saw me. I really wanted to be hero. A lot of what I read was history. And you know, I totally got bit by a bug that I still very much have at a scholarly level today. So advocationally, I studied 15th century, well, actually, it's a subset of that, but 15th century France, and particularly more the knightly or military side of what was going on there. I have a very conscious memory in seventh grade of saying Hey, you know what? I don't want to be a nerd anymore, at least on the outside. I want to be the hero. And I kind of remade myself over a period of years. Not exactly the healthiest thing in the world, but I think entirely understandable, given that age. And so, you know, I am kind of today, I’m this blend of, you know, what some people might call an omnivert, right? I'm definitely introverted. I recharge my batteries by being alone. But you would not necessarily ever guess that if you hung out with me casually. I have pretty strongly developed extrovert skills, right? And today, they're not really a skill anymore. It's not like something that I affect, it's become part of who I am.
Chris Hare 05:52
Yeah, I really resonate with that. As a child, books were a close friend of mine. And I spent a lot of time, you know, in my mind and in my imagination. So you kind of had that decision where you shifted, Hey, this is how I want to be seen and this is who I want to become. What was your path that took you to becoming a marketer eventually?
Mark Stouse 06:13
So I think that actually one of the really interesting parts about life is how you make certain choices and then you think you're escaping something, and then suddenly you find that it's absolutely core to your life, right? So I was, particularly in college I was very social. I had good grades and all that kind of stuff. But, you know, I was able to kind of sail through university. And that in and of itself kind of gave me a certain arrogance. I didn't really want to have to work too hard. I did in one sense, right? But I wanted it to be fun all the time. And one of the things that I really strongly associated with unfun, right, was math. And so I looked at marketing and PR and things like that. So this would have been kind of like in the, you know, late 80s. And there was no math. I mean, the only math was keeping track of your expenses, and basically adding and subtracting budgets, right? That was it. And so I was like, This is awesome. And then I kind of went through an existential crisis professionally, about 10 years later, because I had risen high enough to have a lot of C-suite contact. And I realized that while they appreciated what my teams and I were doing tactically, they didn't get the value. I mean, they knew that they needed us, they weren't going to essentially just eradicate what we were doing. But you know, I mean, it's the classic story. I mean, you know, the endless budget conversations, the snide remarks around the table about value. Like, I had a CEO tell me one time that he was very customer-facing. He said, I have stronger anecdotal evidence of your value then you have any kind of evidence of your value. And as someone who wanted to be taken seriously, almost above all things, that was just brutal, right? And so I started asking around with friends of mine who had pursued, you know, more scientific kinds of majors in school and things like that, like, how do you do this? I mean, what can we do? And so I guess that would have been probably like, 1995, ’96, ‘97, somewhere in there. You know, it was literally the first time that I ever heard the words ‘multivariable linear regression’, which is the math that underlies the scientific method of inquiry. It pretty much is used to answer or investigate 80% of the world's questions. You obviously can do pattern matching with machine learning and all that kind of stuff, but that's not going to give you causality. It’s the regression that will give you causality. So, I was, like, crap, right? I mean, like, this is so not the answer I wanted to get. And in that sense, I have total empathy for marketers and communicators today because a lot of them feel exactly this way, right? This is why multi-touch attribution was a valiant attempt at accomplishing this answer because it was essentially about the presentation of data, the collection and presentation of data as opposed to anything more complicated than that. But it didn't work. And then when third party data was deprecated by Google and Apple, it really didn't work, right? So now we're back to what is generally called marketing mix modeling, which was something that was started by Procter & Gamble, probably 30 years ago. There's a lot of money historically that has been spent on MMM, on marketing mix modeling. Big companies like NEWSTAR, Nielsen, Analytic Partners, you know, almost exclusively consultancies of one type or another, have been delivering this and, you know, generating large sums of money on the back of it. The math has been always rock-solid. The modeling is just superb. The problems are that it's extremely expensive. So we're talking about like one or two models for several million dollars a year, that kind of expense. When I was CMO at Honeywell Aerospace, I was spending $6, $7, $8 million a year just on this kind of thing. It's also very dense. It's hard to wrap your head around the outputs, because the outputs are still very much generated for data scientists, not from normal people. It's very slow, meaning the recalculation of the model is usually every six to 12 months. And so then you don't usually get the results for another three or four months. So by the time you actually see it, even the forecasts are in the past, right? So it's kind of very frustrating operationally. For all those reasons, it doesn't scale well. So we're talking right now to a very large technology company, like a very large technology company, that has been a user of MMM, legacy-approach MMM, for a long time. And they have this, that this is their frustration, right? They can't use it to change their future because it's not fast enough. And also, I mean, in the current marketplace, it's so expensive that even they are having second thoughts about spending that kind of money on it. So this kind of leads us in probably into your next question, but that's exactly why we built Proof, right? I mean, we automated the whole thing. So today, you can access all this power, both on AWS and on Salesforce, for less than $50 a seat per month. I mean, you can't even remotely touch this any other way at that price. And it's really important to us to price it that way. Because if all we're doing is selling a slightly less expensive version of an elite tool, then we're not really helping very many people at all, right? So we had to really bust through the pricing levels dramatically to do that, to help more and more people. But it is kind of ironic, you know, because the guy who ran away from math…
Chris Hare 13:20
…That was exactly what I was going to ask
Mark Stouse 13:23
I mean, you know, not only am I a founder of a math-based analytic software company, but actually today I do analytics myself for fun, right? So it's, you know, life has a lot of curious turns.
Chris Hare 13:41
Yeah, it's just interesting that to the point you made before, you were running away from your core identity before, and then now it's kind of come back to you and you're embracing it. And that's really cool.
Mark Stouse 13:51
Yeah, no, it is. Where I have actually found my own personal synergy on this is, I actually am a part of a lot of data science communities on LinkedIn where we really don't talk about marketing all that much. We talk about data science. And even though I am very well versed today, as let's call it a connoisseur of analytics, I am in no way a data scientist. I am a business leader, an operational leader, who has learned to use analytics very effectively. And so that's the perspective that I bring to those conversations. That's my special place in the universe, at least in in that universe.
Chris Hare 14:43
Yeah, really providing that bridge, right? Between the science, but also making it not only digestible, but also applicable and showing how it can deliver value, right?
Mark Stouse 14:54
Yeah. Yeah. And actually, they're fairly, you know, it's a very contentious community. I mean there's nothing that data scientists love more than to argue with each other. But they also really, they're very rooted in reality and in facts and in knowledge. And so it's actually far more challenging, in some respects, to be talking to a bunch of marketers who actually, for the most part, know almost nothing about this problem and how to solve it, and yet have a lot of beliefs around it, largely because of the choices and the investments that they've made historically.
Chris Hare 15:35
Well, let's shift into that and talk about – I’d love to have you kind of define what the job of marketing is, and then also what the job of sales is.
Mark Stouse 15:45
So marketing's mission – this is my view, but I think it's amply borne out by the analytics – marketing's mission is to help sales sell more product to more customers faster and more profitably then sales could do by itself. That last part of the phrase is super important, right? So there's a certain level of performance that sales could generate without any marketing at all. So that's a baseline. The multiplier effect of marketing is the key thing, right? I mean, marketing was built 120 years ago to be a nonlinear multiplier of sales performance, which is a linear function. You know, if you're a sales leader, and you want, you've been given a revenue target that represents a significant increase over where you are, you need to hire more sales reps, right, because every sales rep statistically can close X amount of revenue every quarter. But it also increases your cost of sales dramatically. And so the more leverage you can get from marketing spin, which is nonlinear, and exponential for the most part, is the most valuable thing you can do. If you can sell more product to more customers faster and more profitably then you could just with sales, then that's a winner. So more product to more customers? That's top-line revenue. Faster? That's revenue from cash flow, so that's tied to average deal velocity. And more profitably? That's clearly margin, right? That's you're making more money on every deal. These are also really tied in with the idea of deal expansion. So it's not just more deals, but a more profitable deal is going to more or less most of the time, like 90% of the time, it's going to be a bigger deal. The only thing that would screw this up is if your pricing model isn't right. So that's the way I would answer that question. And you should never hear an argument about credit for revenue between marketing and sales. Because what I just said is the relationship. One is multiplying the other. And it's very symbiotic. And both sides need each other. “Not you guys, we want…” No, it's both! It's both – we did it together, right? That's the whole thing in a nutshell. But you got to be able to, as a marketer, you've got to be able to prove that the multiplier is present and working and valuable.
Chris Hare 18:46
And that's where I wanted to go next is, kind of, because I've been in that scenario, in a “data-driven organization”, where everyone's coming to the table to show their data and try and prove why they should get credit, right?
Mark Stouse 19:00
Can we actually just address that just as a little sidebar real fast? The last thing in the world that anybody should want to be is data-driven. And that’s because data is always about the past, always. And in an environment like we're currently in, where there's a lot of change and a lot of volatility, what happened in the past, past is not prologue. Past may or may not have anything to do with what you're currently experiencing or what you will be experiencing. So this is where being analytics-led is the whole ball of wax, and any data scientists will tell you that, right? If you're not able to forecast and then compare your actuals with your forecasts and make adjustments, you're not there.
Chris Hare 19:51
You know, when I was at Amazon, I actually was doing a brand building campaign that had never been done before. And finance held me up for months because they basically wanted me to show data to prove what the impact of this future thing, what it was going to do with all the disconnected datasets that even after the fact we couldn't necessarily even prove, right? So I would love to, talking about that, like, how you can bring marketing and sales, they are on the same team, but really align them? How does MMM help with that?
Mark Stouse 20:26
Well, I think in B2B, one of the most important things to understand about this is that marketing and sales create value asynchronously with each other. So what works for sales, meaning quarterly sales goals, and the report out in the QBR, and all that kind of stuff? That does not work with marketing at all. And the main reason for that is that sales performance in Q3 has absolutely nothing to do with marketing performance in Q3. I mean, like nothing. The sales performance in Q3 is impacted probably by marketing performance the previous year. So the previous Q2, or the Q3 or Q4, right? So this is where time lag is the number one issue. And if you don't understand how long it takes for each one of your marketing investments to begin to create value, and then what the arc of value is going forward before it starts to fall off, because you're not maybe reinvesting in it, or something like that, if you don't know that, you will never find your ROI, and you'll never be able to optimize your spend. And this is one of the core fallacies in multi-touch attribution. You cannot optimize your spend based on MTA. The reality is that mathematically, scientifically, MTA is invalid for that purpose. If you're collecting really good data around the customer journey, this is always valuable data. But it's not going to help you optimize the spin because of the time lag. So what you're recording in MTA is essentially the effects of spin that were made anywhere from one to eight quarters before that time. And if you don't know what that time lag is, how are you going to tie it back to that spin? And then optimize it? You can't. It's just not going to happen.
Chris Hare 22:48
I know you've talked a lot about the, you know, I think a lot of this stems from a focus on what's best for the vendor, right? Versus what's best for the buyer, right? And can you talk a little bit about the buyer journey and how marketing typically thinks about the buyer journey versus how customers really buy?
Mark Stouse 23:08
Yeah, I mean, you know, in fact, particularly in in enterprise B2B, confidence and trust on the part of the buyer are statistically the most determinant factors that have an impact on their decision to buy, how much they buy, and how quickly they buy. And so the whole idea that you should be able to essentially track and target and manipulate the buying journey is fundamentally antithetical to confidence and trust, the creation of confidence and trust in your customer. And where you've seen companies really over-rotate on demand versus brand – brand being kind of like a sum-up of awareness, confidence, and trust – when you see them over-rotate on demand, they are destroying their brand for exactly these reasons. So you need both, right? I mean, you can't just go, “I'm just going to invest in awareness, confidence and trust on the brand side, I'm not gonna do any demand at all. I'm gonna go 100% organic.” And my answer to you is you’d better be prepared to wait a long time for your business to build. So you got to have both, but you gotta be able to govern your demand generation in the context of awareness, confidence, and trust. You can't, you absolutely cannot lose awareness, confidence, and trust in order to get a temporary demand fix.
Chris Hare 24:49
Well, let's talk a little bit about why that is. Like, what are some of the beliefs and emotions that drive that decision on the part of CMOs and their marketing organizations?
Mark Stouse 24:59
Well, I think that in many, many cases, they're trying to play the sales game. So demand – the time-lag on demand investments, meaning how long it takes for demand to begin to show some sort of results – is going to be far shorter than almost anything else that a marketer could invest money in. So if you feel like you're under a lot of pressure to show marketing performance within a quarter, then you're gonna focus, also because of the time lag issue, you're gonna focus on top of the funnel not bottom, right? So you're gonna go hot and heavy on demand gen, on lead gen. If you're really getting it wrong, it won't even be demand, it'll be lead gen, right? And then you'll be really frustrated when sales comes back and says, Well, you know, some percentage of these leads, you know, usually a large percentage, if you believe sales, suck. And so this is actually really not effective at all. And the problem here is that there is no, under that construct, there is no single source of truth. It's still your opinion as a marketer versus the CROs opinion, right? And the CRO, as the person who is leading the team that's for the most part seen as generating the revenue for the company, guess who the rest of the C-suite is going to listen to in the absence of the analytics that show the relationships, the causality, going back and forth between sales and marketing? And for that matter other parts of the business as well. And for that matter, marketplace factors over which you have no control, of which we are right in the middle of that situation right now, as a world, in a deluxe way. So right now, 60%, 60 to 65%, of the factors that are driving your success or failure are stuff outside of your control. So what is under your control is essentially like a surfboard. And you're either surfing the wave, over which you have no control, you're either surfing it well or poorly. That's it. And so your feedback loops, your let's call it your analytics, your ability to sense what's going on with a wave and adjust very rapidly is going to dictate whether you wipe out or whether you end up with a glorious finish on the beach, right? I mean, that's it right there in a nutshell.
Chris Hare 27:58
And what are you seeing, as people see the giant wave behind them coming? It's, obviously it can push you one way or the other, can push you deeper into the fallacy of 100% demand or pushing more in that direction. Are there any examples that come to mind, either of clients that you're working with or from kind of past waves that you've been through, of where you have had that balanced approach to brand and demand and really seen it pay off?
Mark Stouse 28:30
When I joined Honeywell, it was almost entirely demand in aerospace. The leadership of Honeywell, all the way up to the parent company, was deeply suspicious of significant brand investments. They would get behind brand investments associated with trade shows, major trade shows, you know, the Paris Air Show or whatever. But outside of that, no, it was a tough, tough sell, right? I mean, I was hired by Dave Cote, to be the CMO for Aero, I think, in retrospect, largely because of the work that I had done on analytics, and my ability to calibrate it. And that's my team's, globally, their ability to calibrate it. And so, we started gradually changing the SKU on spend. And, for example, Honeywell was already doing business with everybody in the aerospace industry. There were no logos, new logos, that were possible. So top of the funnel, and in kind of a classic sense, wasn't really part of the equation. What really mattered a lot was deal expansion and deal velocity. And the big emphasis was on deal expansion because nobody believed that in a highly-regulated industry like aerospace, that you could do much to influence average data velocity, meaning to speed it up. What we were able to show in the analytics, however, was that our brand investments across time, right, took 18 months or so, they were almost completely responsible for what ultimately became about a four and a half percent improvement in average deal velocity. So, if you think about that, so our revenue at the time at Honeywell aerospace was around $12 million, or excuse me, $12 billion, and you get $12 billion, moving four and a half percent faster into the company, the CFO is going to be your best friend. So we were also able to show that we were really helping sales drive significant expansion and deals because we changed the go-to-market on that. We went from product-by-product-silos sales to solutions, big packaged solutions, that targeted big hairy problems in our customers, right? And so we got called out twice in earnings calls for this, right? So it was really, really cool. More recently, Johnson Controls, one of our oldest customers, was able to see in the forecasts, before COVID was even really understood as being what it was going to be in terms of marketplace impact, they were able to see that something was getting ready to happen that was invalidating, or was going to invalidate, a lot of their historically very successful marketing investments. And as those models were updated and updated and updated through the spring of 2020, they started going, Whoa. And so, for example, field marketing. All these events in the fall of 2020? They moved very rapidly to pull out. So again, this was before a lot of people did this kind of stuff. They obviously had to pay some sort of penalty, and probably in some of those cases, if not all, but they saved, like, $6 million, that they were then able to plow into other things marketing-wise that were far more effective and during that period of time, and be able to evolve that, right? One of the things we're talking about here is there is no steady state that you're planning for or against. It's highly dynamic. I mean, you asked a question, Chris, about the wave, you know, and are people thinking about it? I don't even think that they're really thinking about the wave a lot of times. If you look at the way a lot of marketers measure all this and think about it, they're focused on what they're doing. They're not focused on what the macro and its influence on what they're doing is, headwinds or tailwinds, interest rates, inflation, competitor action, sentiment for or against their company, all these things, right? They're just not there. So the analogy here would be your GPS on your phone is tracking your progress along a route, but it is tracking nothing else. So when all of a sudden you encounter traffic that's piled up behind an accident on your route, the GPS gave you no warning. And you're just sitting there going, Well, what happened? Well, that's almost useless. There's a great scene in the movie Lincoln, where Lincoln was talking to another politician who's talking about the fact that a lot of people in the United States have lost their moral compass during the war to get around slavery. And Lincoln was saying, Yeah, you know what, I used to be a surveyor. And I totally agree that a compass is really important, and it's going to point you to true north. But it has nothing to say about the mountains and the swamps and all the other obstacles that you're going to encounter along your journey. So what's the value of knowing true north if you don't know the rest of it as well? And that was, I mean, we're sitting in the movie theater going, Wow, that is exactly you know, that's exactly it. And so I think that the reality here, again, going back to the GPS for a second, is that the reason why it's so valuable is that it's tracking your progress, and it's tracking all these other factors that could speed you up or slow you down. And then it's more helping you make intelligent adjustments before you run into the problem, so that you're not too delayed by it, or you don't have big problems as a result of it. And that's exactly what the analytics in Proof, or, you know, traditional regression or marketing mix modeling, that's exactly what it does.
Chris Hare 35:23
I've heard you talk before about the weight that all of these factors that are outside your control, that are outside the business, what level of impact does that have on the business? Because I hear you, it seems very much like the decisions that are being made, as with all of the macro at this present moment, a lot of them are just very reactionary. But to your point, I think probably very few of them are based in a measured, let alone an informed, position.
Mark Stouse 35:51
So, how many times – this has probably happened to almost everybody that’s listening – you're walking down the street in a big city, big downtown city like Manhattan, right, where there's a lot of tall buildings that obscure your phone's sightline to the satellites, to the signals. So then all of a sudden, you know, you're using your GPS to walk along to get to a meeting, and all of the sudden, your dot freezes on the map. And you're like, Oh, man. And then all of a sudden, it leaps ahead when it all of the sudden reconnects with the network, it leaps ahead, and you realize that you missed your turn. So now you have to redo it all. That's an example of time lag. And if you can't compensate for the lag, you will always miss the turn. And so the good news, guys, on this is that analytics, particularly the automated variety, the low latency variety, like Proof, will do this for you, right? It's not, once you get it set up – and that's not even a terribly huge lift, right? – once you get set up, it's virtually autonomous. It's going to operate just like a GPS in your world. If you think about the GPS on your phone, that's actually very similar to the interface that we built for Proof, right? Because we wanted, you know, normal people to be able to see the outputs of these analytics and make better decisions based on that than they otherwise would be able to.
Chris Hare 37:35
And so what would it look like if you were, you know, say I'm a CMO, and you come in and start working with me today, and with the CFO. Like, what does that, you know, we've talked about what that current world often looks like. What's the future that you're creating for them? And, yeah, I'd love to start there.
Mark Stouse 37:53
Sure, I mean, a lot of this is actually not reinventing the wheel at all. It's a scientific method of inquiry. So the number one step is, What are the questions that you need answers to? Usually, the C-suite can rattle those off in short order. And, yes, it is absolutely true, I can predict most of them. There's, you know, certainly the top 20 to 30 are incredibly consistent, because no matter what your business is, these things are going to be true. So there's those questions. And then there's the possible answers to those questions. It usually revolves, at least in the beginning, around what you're already doing. And it's your intent, based upon the investments that you're making, to have an impact in some of these areas and answer some of these questions, right? So that is essentially the model that's being created. The analytical model takes your hypothesis of value creation and says, Okay, you know what, this is what that looks like. We're investing in these 10 things. And we believe it's going to impact this outcome. And we want to test that, and we want to see how long it takes, what the multiplier on the investment is, so that would be the ROI, and how these things all work together (or maybe they don't work together) to produce this outcome. And so the models then generate a checklist of the datasets that you're going to need to arm the model. And once that data is imported into Proof, for example, the modeling happens in minutes, at most an hour. And it starts to, every time new data is introduced into that model, it automatically recompute the model. So you get not only the forecasts, but as the future becomes the present, and new data is presented, it's recapping it. And it's showing you the delta, the difference, that may or may not exist between the forecast and reality. And if there's suddenly a growing difference between those two, it will show you what factors are driving that to happen. So this is, you know, again, the GPS analogy would be usually something on the outside has changed that is making your route that you're on no longer the best route. So just like on your GPS, it allows you to make choices, right, and say, Okay, you know what, I'm not going to stay on this route. I'm going to pick, maybe they're given a choice between two alternate routes, right? I'm going to pick this one and it's all going to be good. That's exactly what happens in Proof, right? It allows you to model very fast, very simply, changes to your inputs, meaning the investments that you're making, and then what that's going to look like in terms of, Is it going to bring you back on track? Is it going to speed you up? Maybe something is happening with a headwind that's really slowing your progress down. So that would suggest that you either have to make qualitative changes or you have to spend more money to overcome the headwind. So it allows you to model all that, like, right there live in a meeting. You don't come back a week later and try and resume the conversation. You're doing it right there. And it's geared so that you don't have to be a data scientist to do it well. You can just be a normal marketer, normal business person, and you can do it. But you know, guys, seriously, probably one of the most, out of all the important things that I can share about this, do not neglect all the stuff that's outside of your control. Don't neglect the importance of understanding the wave that is building beneath your feet. That wave can make you a star, it can also kill you. And you don't control it. You know, the idea that we're masters of the universe is a vanity of monumental proportions. We control almost nothing, which means that the stuff that we do control is even more important to control well.
Chris Hare 42:43
So going back to when you had that very uncomfortable conversation early in your career where it was, you know, what is the measurable impact of what you're delivering? I imagine this conversation, when you're talking to marketers, talking to CMOs, can be potentially pretty uncomfortable in terms of, Hey, we're going to reveal all of these things across the business. What does that conversation look like?
Mark Stouse 43:07
You know, it is, it's tough, right? Part of the reason why it's tough is that most marketers, by the time they reach any kind of senior position, have been pretty beat up on this issue. And they have an understandable flinch. I mean, marketing is one of the very best jobs in any organization, except for this issue. Because of the regular insults and budget cuts and everything else around this issue, it's the one thing that makes marketing a lot less enjoyable for a lot more people than it should be. So they have this flinch. They also have tried to kind of fix this issue in the best way that they knew how, but they are running up against their own lack of knowledge. And in some respects their lack of curiosity. But we're now back to that old saying about, you know, if you keep doing the same thing over and over again and expect a different outcome, that's the very definition of insanity. That's what this is in so many cases, right? You cannot “data” your way out. Data is like West Texas crude, okay? To make gasoline to power the car, you got to have West Texas crude or something like it. But if you were to try to put West Texas crude into your gas tank, it would ruin your car. Your car would be done. There's a middle step there where the crude is refined into gasoline that's then sold to you at the pump. And the analogy here is that refining is analytics. And I'm not saying that data is not important. It's crucial, right? But if that's all you got, you don't have much that has utility, right? And so this is fundamentally going to be, it always is, change is always about leadership and culture, more than anything else. More than software, tech, process, whatever. People are the long pole in this equation. And so if you're a CMO, or you're leading a team, you've got to be willing to say, You know what, I gotta find out more about this. Just not that I need to become a data scientist, but you need to really understand what the truth is about all of this and understand that marketing is not an exception. Marketing is about change, it’s about understanding change, it’s about making change, right? And so whatever you're using has to be dynamic, and it has to be analytics, it can't just be data. So you got to get solid on that. And then you've got to have the courage to move forward and lead your team in that direction. One of the first questions that I get all the time is, Well, what if it shows that a lot of my investments have been bad, and ineffective, and wrong, right? I'm like, Well, the good news is that the 80/20 rule is alive and well. And that, for the most part, a lot of marketers have correctly intuited what's working. The problem is you can't prove it, and that's why you're seeing 50% budget cuts as we go into a recession. And so, bottom line here is that you have to say, Okay, you know what, I'm going to set my ego aside, I’m going to set my fear aside, I'm going to realize that probably somewhere 70, 80, maybe more of what I do, what I've invested in, what my team has invested in, is probably going to show pretty good results. And then there's going to be 15 to 25% of it that is sub-optimal. And maybe a very small portion of that is a total bust. And yeah, that's a bummer. But guess what? Once you know it, you can correct it and then you can largely eliminate it. And because the models are constantly recalculating that relationship, your ability to constantly re-optimize your spend, net of time lag, and net of all these multivariable factors that you're, you know, that’s a part of your life, is really, really cool. Because the odds that you'll be really caught out by something fall into fractions of 1%.
Chris Hare 48:00
Correct me if I'm wrong, but I think you've encountered situations where because of lag time, CMOs have been let go, and then you're brought in? Talk to me a little bit about that. And what did you show?
Mark Stouse 48:11
I can't go into a whole lot of detail on this, but it was about four years ago. And we looked at five or six companies as part of a, kind of like an analyst report on this issue. And these four or five companies had all recently fired their CMOs. They also had kind of like the same essential basket of questions and the same basket of data to support the analytics to answer those questions. And so we essentially did a project for this report on, well, kind of the net question was, Were these terminations justified? And what we found is that four out of five were not justified. In fact, they were highly successful, but the time lag masked everyone's ability, including the CMO’s, right, everyone's ability to understand that fact. And so, when things really, so you know, they terminated these CMOs, then things started to get better, right? Or they felt like it was getting better. And they were like, see, right? We didn't really need that person, bla bla bla bla. And we came in and said, No, actually, what you're feeling right now are the positive results of investments that were made nine months ago.
Chris Hare 49:40
You know, you talk about the narrative about the relationship between the CMO and CFO. I'd love to switch over to that and understand what that narrative typically looks like and how that can change.
Mark Stouse 49:52
Well, I would say that the biggest difference between finance and marketing is that finances is usually, almost always, highly literate on these issues. They speak the language of the business. They understand data, they understand analytics, they work with it every day. They are really grounded in the core principles that undergird everything that we've just been talking about. Unfortunately, I would say most marketers still don't speak the language of the business, don't understand data, don't understand analytics, and don't know how to have a credible conversation with finance. So for example, finance is totally aware of time lag. And while most marketers will say, Well, of course, it takes a while, it takes a while for these things to have an effect. What they don't realize is that knowing what that time lag is is totally doable, and absolutely critical to understanding the value that they're producing. So this whole idea that a lot of marketers have with finance teams, that says, Hey, we've been doing this a long time, you just need to trust us, that's just fundamentally unreasonable. And it has to do with the fact that finance and the business writ large, okay, understands that there are tons of variables that are impacting the equation, again, including a lot that you don't control as a marketer, or as a sales leader, you don't control them. So if you're not answering this question, if you're not proving your value in that context, they don't believe it. What they're saying is, you are one of the largest line items on our budget, on our expense line. You can't prove, to our satisfaction, what we're getting for that money. You can't account for the time lag, which also means that there's no forecast that we can depend on. And so when we get into a bind, kind of like where everyone is right now, going into what is likely to be a recession, people are cutting costs, they're going to weigh a maybe against a certainty. Because guess what? That's what we all do in these kinds of situations. And so they're gonna say, Yeah, you know, what, we might lose some value in the future by cutting marketing in half. But we know that we have to save some money. Now, what happened with Johnson Controls is, in like August or September of 2020, finance came to them and proposed this huge cut. And they were able to show the analytics to finance and wargame, the future impacts of those cuts. And the finance guys looked at it and said, Wow, you know what, clearly this would be a really, really bad idea. And so they took a very small fraction of what was originally intended to be their cut for marketing and they said, We're gonna go find the rest of the money somewhere else. Why? Because all of a sudden, they could see a reliable, mathematically solid projection of what they were going to lose in the next two years, in terms of market momentum, demand, brand presence, all this kind of stuff, and how that all tied together with revenue, margin, and cash flow. They were able to see all that and make a value judgment and say, Wow, you know what? That's too expensive. We're not going to pay that price and lose all that stuff. So, I mean, that is the relationship in a nutshell between marketing and finance. When marketers look at business leaders, particularly finance leaders, as a bunch of Philistines that don't get it, don't get marketing, there's a reason why the business leader doesn't get it. So maybe you need to help them get it not only for your own benefit, but for the next person's benefit that is sitting in that same chair, maybe two or three years later, right? So solve the problem, don't just run away from it. And don't blame it on the business leader, because at the end of the day, they're the ones paying for it all, right? I mean, you don't have a marketing program unless they invest in it, right? So you got to remember the relative relationships here that exist, organizationally if nothing else.
Chris Hare 54:49
You know, as we're coming to a close, I think the one piece that I would love to understand is just with all of the uncertainty, what does the future look like just from an emotional standpoint of, you know, if people buy into what you're saying and buy into this approach, what does that future look like for them?
Mark Stouse 55:08
Well, I think that, so GPS is a single source of truth about a specific set of circumstances. What all parts of a business need to have is a similar single source of analytical truth that’s synced up with the outside environment, that allows everybody to see equally what's going on and how things can be re-optimized and made better than they are. You know, we're all on the same team. And we're not only on the same team, we're on the same team with our customer, right? And we're all having to deal with these external factors, hopefully in the most constructive way possible. And so if you see it from that point of view, as opposed to an egocentric, I'm going to be the master of the universe, I'm going to have the biggest part of the go-to-market budget, you know, I, I, I. We all know that that is an inherently disruptive perspective, in any part of life, right? So why do it here? And so the analytics really level that out, and they allow everybody to work together in a highly constructive way. To drive really great change, change that is mutually beneficial for your customer, for the marketplace at large, and for the company and all the employees in that company. So I mean, that's the way I look at it, right? I can remember a time, unfortunately, where I wanted to be the master of the universe. In fact, probably in retrospect, I'd say that was almost like my number one goal, right, because again, remember, going all the way back into childhood, one of my big goals was to be taken seriously. And if that's one of your goals, then the slide into narcissism is pretty short and steep, right? Because the only way that you can ultimately define that sometimes is to say that you are taken more seriously than anybody else. So then that translates that into a zero sum, which is a bad idea. Super bad idea. And so one of the things that really saved me, or quite a few things, actually, that saved me. But one of the things that saved me was the analytics. Because when you look at the analytics, and you see the truth, you see that while you're really important, you're not even close to being the whole deal. And you can't control it all. Because even if you somehow got control over all of marketing, or the whole go-to-market engine, you're not going to control the economy, you're not going to control interest rates, you're not in control what your competitors do. So when you start to see that play out in the analytics, for me, anyway, there was like this giant exhale. It wasn't all in one moment. It was kind of a period of exhale, right? But I really started to realize what my mission really was, as a marketer. It wasn't to dominate the credit landscape inside my company. It was to be the best marketing leader and lead the best marketing team possible to generate the highest multiplier effect on other people's work. It's really kind of coming full circle, winding this up putting maybe hopefully a bow on top. Analytics, if you look at it as a coach, and not a judge, it will make you a better person. It will make you a better marketer. It will make you more empathetic to everybody else whose efforts are represented in the analytics, right? I mean, you'd have to be kind of a really bad person for that not to be the case, because it's laid out in such a transparent way in analytics. So, probably, ironically enough, this kind of really brings us full circle to the top of this conversation. You have a choice in any kind of change moment. Is this going to ultimately make me a better person? Or am I going to fight it and kind of descend into deeper and deeper levels of self-protection, which is really another way of putting of saying narcissism, right? What are you gonna do with it? You're responsible for the knowledge, right? You're also responsible for the ignorance. So, I would submit to you that having the knowledge is way better than having the ignorance right? So change is, that's just the realities. And for me personally, it made me a much better person in the end. And I never would have believed it, if you had told me that 30 years ago, that analytics, that math, was going to make me a better person, but it has.
Chris Hare 1:00:33
I love it. Thanks, Mark. Really appreciate you joining us.
Mark Stouse 1:00:37
Chris Hare 1:00:39
Now more than ever, companies need a compelling narrative that will carry them through uncertainty, and that will enable them to create a better future with their customers. And they need a way to measure the impact of that narrative and the marketing investments that it drives. Since Mark and I chatted a couple of months back, we're continuing to see wave after wave of volatile change in the world around us. The media has plenty of doom and gloom to go around, folks are seeing marketing budgets frozen or cut. It seems like every day there's a new batch of layoffs and fear seems to be on the rise. How are you leading amid all this uncertainty? Some of my key takeaways from this conversation for marketing leaders are that first of all, your team has one of the largest line items in the budget. So when times are tight like they are now, you are going to be a target for cuts. If you can't prove the time lagged value of your investments, you're in a risky position. Second, prioritize the relationship with your CFO. And if you don't already know how learn to speak the language of business. Mark has some great posts on this on LinkedIn, so I'd recommend following him and checking that out. Third, recognize that it's going to take time to prove the end-to-end value of your marketing investments by using MMM. But that is a commitment well worth making for the long-term growth of your company and your career. And last but not least, I think this is a great time to think about your own value as a human and as a leader. Where do you look for meaning? Where do you find fulfillment? If you look to your role, or to your company for that, you may not find what you're looking for. For Mark, freedom came when he realized he didn't have to prove his value as a human. This enabled him to shift his focus to helping others advance by empowering them to create and measure their own impact. What hit you from today's episode? Please drop me a line and let me know. I'd love to hear from you. And that's it. Until next week. Thank you for joining the Storied Future Podcast. Please subscribe, leave us a review, and be sure to visit TSFpod.com for more information about Mark Stouse and Proof Analytics, as well as Show Notes and to check out other episodes.
The Storied Future Podcast is a production of The Storied Future, LLC, produced and edited by Ray Sylvester, audio engineering by Ali Özbay, logo design by Evan MacDonald, theme music by The Brewz. Your host is me, Chris Hare. Learn more about our work helping leaders create great B2B narratives for a change at www.thestoriedfuture.com.
Mark is the CEO at Proof Analytics, a marketing analytics platform that provides cause-and-effect analytics that show marketing and sales’ true impact and financial worth.
They offer the only marketing resource management (MRM) solution native on Salesforce and the only automated go-to-market (GTM) analytics solution, which is a super-modern version of the long-proven marketing mix modeling system developed by P&G.
Prior to founding Proof, Mark was CMO at Honeywell Aerospace, where he deployed extensive sales and marketing analytics to calibrate and establish marketing’s contribution to sales productivity. This led to a year-over-year cash-to-cash return on marketing investment that exceeded 900 percent globally. Mark and his team also drove improvements in organic deal expansion of more than 40 percent and improved pervasive deal velocity by 4 to 5 percent.
- Automated marketing mix modeling: a better way to grow your business with data by Jukka Puputti (Supermetrics)
- Understanding marketing ROI is a lot like studying climate change or pandemics. Here’s why. by Mark Stouse with Dr. Melissa Kovacs (LinkedIn)
- The Marketing Proof Gap: What It Is And Why Marketers Should Care by Kimberly A. Whitler (Forbes)