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The Annuity of Inbound Marketing with JD Sherman

By Wendy Covey | CEO and Co-Founder

Marketers understand the ROI of inbound, but how can you explain in a way that will resonate with your C-Suite? HubSpot COO JD Sherman thinks of inbound as a factory, where assets are created versus rented, and the investment pays off as an annuity over time. 

I often run into technical company leaders who are skeptical about the ROI for inbound marketing. They have been told that it takes six, nine, maybe even 24 months for a payback, and when weighed against adding another sales person or another few trade shows (whoops – I guess not in the current COVID-19 environment!), essentially paying a premium to tap someone else’s community, inbound appears to be risky and expensive with a questionable ROI. 

 

When I posed questions about the ROI of inbound marketing, you might imagine that JD had much to say. With inbound marketing, you are building an asset, which requires an initial up-front investment. There's just no getting around that. Investing in inbound is like building a factory. It's durable. However unlike a physical plant, businesses cannot capitalize this investment, so it is important to have a long-term perspective in terms of payoff. One way to do this is to weigh the customer lifetime value of a customer (LTV) against the cost to acquire a new customer (CAC). You may find that your marketing and sales team should be spending more time delighting, retaining and growing existing clients and less time chasing new prospects. 

 

JD is a self-described "first principles guy," and when it comes to inbound marketing and selling his first principle is to add value first before extracting it. When businesses look to extract value immediately, this is a huge red flag to him. Interruptive sales styles do not lay the groundwork for a healthy relationship, instead it creates a potential for a negative brand image. Companies who look to throw yet another sales person at the problem are not thinking long-term and need to re-examine their marketing and sales model.

 

Marketing's goal should be to create "hand raises" for their sales team - engaged, qualified prospects exhibiting signs of interest. In this model, sales can continue to add value before extracting it, and perhaps have more time available for not just opportunity management, but customer retainment and growth. HubSpot examined their own marketing and sales efforts and budget against the different stages in the flywheel, from awareness and prospecting to closing and delighting, and found that they were overly biased towards the first two stages. By reallocating much of this effort, they've made significant increases in LTV while meeting revenue growth goals. 

 

JD and I go far back to his early days at HubSpot when we met at a partner event. On the episode you'll learn about his background in the semiconductor industry, and well...we instantly bonded over a shared understanding of the potential and struggles of applying inbound principles to a highly technical, conservative industry. That, and a long-standing bet on the LSU v. Texas A&M football match-up. JD has graciously penned the forward in my new forthcoming book (May 2020!) Content Marketing, Engineered. (Pre-order your copy today!)

 

Wendy Covey Burning LSU Shirt

Photo of Wendy Covey preparing to set fire to an LSU jersey incorporated by JD Sherman into a HubSpot Conference keynote. This Aggie v. Tiger rivalry is serious stuff!

 

 


 

 

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Wendy Covey

CEO and Co-Founder

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