(00:00:00) – Hey everybody, it’s Jenni from GrowthMode Marketing. You’re listening to Demand Gen Fix, the podcast where our team of GrowthModers and our guests discuss the ins and outs of demand generation, and why we believe it’s the key to long term sustainable growth, especially in the HR tech industry.
(00:00:20) – Hello! Deanna here, and I’m back to continue the conversation around creating a new product category in the crowded HR tech market. What should you do if your product doesn’t neatly fit into the seven product categories and 55 applications that are defined by Sapient for the HR tech market? Some experts advocate for creating your own category and leading the way to market domination. But on the other hand, some warn that this approach can be risky and potentially a costly mistake, so which strategy is the right one? I am back with Sam Kuehnle, vice president of marketing at HR tech company Loxo, to continue digging in on this topic. Let’s jump back into the conversation.
(00:01:05) – As an organization, you declare we’re creating a new product category because you have to go in with the mindset of we are going to get the market to start thinking differently, and that is never going to happen overnight.
(00:01:18) – No, and that led into okay, well, what do I want to do for our strategy because, luckily, we did go from 0 to 1 in a sense where by the time I finally got here, Matt was just like, okay, cool, we’re going to really start pushing the market. And he also believed in this long term strategy. He believed in the demand gen mindset, which for me, I’m incredibly lucky with that. Like, go find; go pull ten CEOs, nine are going to be like, absolutely not. You’re running predictable revenue model. Like, if you find that one, that was a big part of why I came here. I was like, oh, cool, I don’t have to convince him. He gets it. He just needs someone to do it and confirm that his hunch on this is right. So, when I came in and I knew I was going to run the strategy, again, I talked about, okay, market super saturated. What else do I know about? Like, just our product as a whole.
(00:01:59) – We had phenomenal win rates. And so, mind you, when I was at Refine Labs before, I saw hundreds of different B2B companies and what their win rates were, what their conversion rates are through stages, Loxo is at the top of that. Hands down, I was like, whoa, that tells me something right there. And what that was was even though it’s a super crowded space, when people see Loxo, they choose us, but because it’s so crowded and because no one’s googling talent intelligence platform, we have to get in front of them and let them know, hey, we exist. Here’s what we’re solving for, and here’s how we can do it. So, to simplify, we had incredibly strong product market fit but just weren’t getting enough at bats. So as a marketer, that’s our dream, right? Oh, you’re telling me I just have to build more awareness around it and everything else. So, I know you referenced a few reports earlier. There was one that came out from Bain a handful of years ago, but it was something like four out of five B2B buyers have a day one list when they start researching.
(00:02:50) – So, I need a new ATS platform;, I need something. They’ve already got companies in their head, and if you’re not on that list, you have a 10% chance of winning that deal, compared to 90% of those decisions are made from one of the vendors on the list, even if they submit RFP and open it up to 20 different companies, they’re going to go with one of those. So, our strategy is really rooted in solving that exact problem. Like, how do we get on the day one list so that when someone finally enters the market, we’re not trying to push them through the funnel prematurely, but they’re ready. They know there’s a problem. They need to do something better. We’re not trying to win on Google with best ATS recruiting agencies, but people are just going straight to the browser and typing in Loxo.co, coming to the website, or going over to LinkedIn and looking up Matt’s profile, my profile, someone else and saying, hey, we’re ready, let’s talk, let’s get a demo. And they’re coming to us with that.
(00:03:37) – And so, that’s the end goal, right? And it’s incredibly, incredibly, incredibly easy to say, but it’s really hard to do in practice, right? And that’s always the hard part. Leslie’s podcast, like oh cool, I can go do that. Sam said all I have to do is XYZ and it’s going to happen. It’s like, well, yeah, but that’s a really tricky part because if you treat them like they’re in the market, and only run ads to like talk to our sales team, not the traditional lead gen model, that’s not going to land really well, especially with like a hard pitch on something they’ve never heard of. All this change management. Like you’re going to scare them right away. So, a lot of it you’ve been following Refine Labs and everything. It’s okay, well what we need to do is we need to educate the market, and also entertain them because of how crowded it is. I always laugh, I tell my marketing team when we work on things. I said my only restrictions on what we message is that it cannot have a blue background, and it cannot have the word ROI or streamline in the copy.
(00:04:30) – That’s it. Do anything else you want, but those are really it because everything, if you go scroll LinkedIn feed, it’s going to have one of those three things I can promise you. It’s like some ad talking about ROI, or it’s some blue background boring ad that doesn’t stand out at all. And so, that’s where I also say, like people are on social media because they’re killing time. They want to learn, they want to be educated. They want to be entertained. Something like that, so that fills that need. What that does is that immediately has you stand out just because it’s so much different from all the others, but when it’s also relatable to them when you have, and this is another core part of what makes the demand gen strategy so impactful, is you have to really nail down your segmentation; your targeting, and make sure that you’re only getting in front of the right people where the message is going to land. But you can also talk in a way that is very specific and not so broad generalized, that it waters down the entire message because you want to talk to everyone.
(00:05:18) – So, we do that with our marketing and then with our (inaudible words). We also have them take a highly consultative approach to help prospects solve. Like, what are you really trying to accomplish at the end of the day? You don’t want a better ETS, like you’re not trying to just increase your open rate by 2%. You need to really think about the whole way you’re doing this. And so, this is all a long game, but it’s not just marketing. We span out across our entire go to market teams. And that’s really called this, like the simplified version of the strategy that we’re running.
(00:05:46) – So, I know you’ve been at Loxo about a year and a half. How have you seen buyer behaviors evolve in the past 18 months? Because a lot of companies out there that are saying, hey, the things that were working for us in marketing 18 months ago, two years ago don’t seem to be producing results right now. And that is happening across the board. I mean, I think that’s why you and I are both big advocates of demand generation versus lead generation, because you mentioned the predictive ROI model. Everyone’s still trying to run that. The problem is it’s not effective anymore. It was a great model ten years ago, maybe even five years ago. Now, It’s a very expensive model that’s hard to really be the results that you need if you’re in high growth mode.
(00:06:31) – Yeah, it’s getting expensive. Cost per clips are going up. There’s more and more people vying for your attention; for your eyeballs. It’s driving the costs up. Buyer behaviors change too. People are seeing through that. They know what’s going to happen. If I click this ad, I’m going to get called by hunt. I’m gonna get five calls from BDR in one day; ten emails I don’t want. Not only is things more expensive, but it’s less effective at the end of the day. So, past 18 months, what I’ve been seeing is actually longer sales cycles. Part of this is due to macroeconomic conditions, and especially those are then impacting lows in the HR and recruitment space, so companies are hiring at the same rate. So, that makes it more competitive for a lot of recruiters especially agency recruiters.
(00:07:09) – So, we’re seeing longer sales cycles, just more; I guess a lot of this comes back to, I’ll just call it, you have efficiency and then you have, like growth at any cost. was the name of the game until early 2022. Probably late 2021 was when it started to go down, but now companies are just like, I have to be responsible with our funding and everything else. So, we have longer sales cycles and a higher focus on efficiency, which is really what I’ve been seeing in the last 18 months or so, but that’s completely okay with me. I’m all right with that one, because that leans into the exact plan that we want to take. I don’t care if you close in 30 days or 45 days. We need to build your trust. We need to be the number one person. Like, yes, I would love for you to close in 30 days. And in time, economic conditions will make it a little bit easier. With those, we’ll come back down. And even though the macro sales cycles are getting longer, our sales cycles are getting shorter for the inbound side.
(00:07:58) – I look every quarter and see what’s our average sales cycle. It’s going down, believe it or not. So, some on the BDR side, it’s still a little bit longer. Granted you’re pulling people versus pushing, but we’ve evolved with it because as I said, it’s like we’re playing the long game. Our win rates are increasing quarter over quarter two. So, even if your sales cycles lengthen, that’s okay because you’re winning more deals at that rate. And a lot of our competitors are, I don’t want to say, they’re not, unfortunately VC backed. They had a vision; they had a great product and everything else, but they have limited timelines. I would say where VC firms are getting more and more focused on, okay, are we getting a return from this company or not? What are we seeing in the market and everything else? So, monopoly money isn’t being handed out left and right like it was before, and they were being much more scrutinized. So, if they aren’t hitting certain growth rates or anything else, they’re not getting the next round of funding.
(00:08:43) – And if they’re not getting the next round of funding, that takes down that pool of 500 ATS platforms and reduces it. So, we’re building this mindshare as all these other companies are playing that old game and some of them are folding. So, it’s this perfect collision where if we just stick to our strategy and play the long game, it will work out, but you just have to make sure that you’re not making these knee jerk reactions all the time.
(00:09:04) – I think it goes back to it’s really hard to play the long game for a lot of these organizations because they don’t have that option. They don’t have enough cash flow to keep going, but at the end of the day, if a prospect is not in market to buy right now, I don’t care how good your marketing is, if they are spending a lot of money to purchase your technology solution, you’re not going to convince them overnight to do this. It’s not like they just wake up one day and go, ahhh, I think I need this solution, you know? And even if they do like the organization has to get there, they have to get the budget. They have to convince the powers that be within the organization.
(00:09:43) – And that’s where the long game is really important because Gartner’s saying, and we see this in the market, you probably see this at Loxo two, that prospects are making up to 80% of that purchase decision before they’re willing to engage with the sales rep. Yes, a lot. That goes back to what you were saying, where they’ve got their shortlist already of who they want to work with. And if you’re not on that, you just missed the opportunity to be considered for that sale. By the time you’re stepping in because you need leads and you need them now, it’s already too late.
(00:10:17) – Yup, so one of my old colleagues, Torry, used to say this all the time and I loved it. He called it win before Google, and it’s that exact thing right there where if you can get on that list before they have to go to Google to find you, you’ve got a good chance.
(00:10:29) – Absolutely. So, I know you joined the team a year and a half ago. How long did it take to start seeing results? And what are you measuring today to show that you’re progressing in the right direction on that long game?
(00:10:42) – Part of it, I don’t want to call it cheating, but we saw results immediately because we went from zero marketing spend to some marketing spend. So, unless you’re doing something so backwards, you’re going to see some results. So, I have to always caveat with there is that little incrementality, but most companies it’s like there’s something in place. So, it really took me a few quarters to see meaningful growth though. And what I mean by that is first couple quarters it was just fluctuating left and right, because it was this existing word of mouth traffic, a little bit of pent up demand, the early, early adopters are people that already were in market. And we did do some Google stuff early on, like best ATS software, things like that. So, we were capturing some of those types of people early on, but it did take a few quarters to really see that meaningful results.
(00:11:22) – And what those looked like was a significant increase in hand raisers, so we’re a dual motion growth model. So, we have a product led side. You can go in and start with a trial, or have a free version forever. And then we had a sales led side where it’s your tradition like okay, let’s go talk to a sales rep, figure out the best plan for us and go from there. After a couple quarters, we started to really see an uptick in those hand raisers, the pipeline conversion rates, and then that meaningful qualified opportunities closed on deals. And what I looked at is the number of hand raisers. Cool, you can get more. This goes back to the lead gen, but at the end of the day, I told our team, I said, do not fixate on this number because what we need to know is the number of qualified opportunities and closed one deals. Is that growing at the same rate, if not higher than before? Because if we’re doing this right, we should actually see higher conversion rates through the funnel.
(00:12:12) – And compared to before, when the strictly word of mouth or anything else, we should have more qualified opportunities. We should have more customers signing the deals at the end of the day. So, the hand raisers is the leading indicator. That’s good, that’s great. I’m not signing up for a hard number. I would tell our leadership team, our sales team, I said the numbers I’m focused on are the ones later on down the funnel, your pipeline, your revenue. Because at the end of the day, I said, you guys pick. Which number do you want me to help you hit? Hand raiser goal over here. Cool, I can go get you that all day, every day, but I think you guys want me to focus on the pipeline and revenue on this side, so I said, I’m going to model out roughly what we think we should need in terms of hand raisers. The cost per versus the conversion rates to qualified opportunities, but those are guardrails for me to help me understand.
(00:12:52) – Like, if we’re doing something, is it working or is it not working? Because at the end of the day, the ones that I care about are these ones a little bit further on down in the funnel. And that’s what I’m holding our team accountable to at the end of the day. So, if we hit the pipeline goal but miss our hand raiser goal, cool. I do not care. That’s great, we did our job. If we hit our hand, raised our goal, but missed our pipeline goal, I say that’s a problem. And that’s how more companies honestly should be operating at the end of the day, because sales and marketing, they’re not these like, okay, cool, here’s your lead, here’s a hand off. Like let’s brush our cleans hand of it, like, you need a properly integrated go to market team, at this point, and I think that honestly is one of the biggest takeaways from like shifting to the strategies that it requires you to have that type of cross-departmental, teamwork and collaboration to be successful.(00:13:35) – Because the success of both departments depend upon the other. Sales is really relying on marketing to bring in these high quality leads, but if they aren’t closing, then marketing flops. So, it’s this give and take from both sides, but that’s one of the benefits, I think, to what’s really come as a result of all this, and I love it. At the end of the day, I love talking to our sales team. When I was at Refine, I said, I love talking to the VP of sales that we work with more than most of the marketers I work with. Don’t tell them I said this, but because we’re on the same page, at the end of the day, they’re oh cool, you’re like, not a marketer that just wants to give us a bunch of crap. You want to help us; like our AE’s hit their goals and everything else. Once they hear that and they’re just, okay, it’s not just a bunch of garbage leads coming over, but these are actually going to be something meaningful and everything else. That’s where you get that alignment that really helps foster the trust and growth that you need.
(00:14:16) – Yeah, and I wholeheartedly agree with what you’re saying here. You’re speaking my language. Yes. At the end of the day, what matters in an organization, it’s the revenue. No matter how good marketing thinks they’re doing, if the leads you’re passing over are not turning into revenue, your marketing is not impactful. And there are a lot of levers, obviously, between marketing and sales that have to be looked at to determine where the missteps might be happening. But I think a lot of times that misalignment between sales and marketing, it happens because sales is held responsible for sales and revenue, and marketing at a lot of organizations are not necessarily held to that same standard. But at the end of the day, they should be, in my opinion, because it’s like, what’s the point of marketing if you’re not helping create that brand awareness, credibility, and trust in the market and ultimately the demand for your brand that will drive the sales for the organization?
(00:15:18) – No, you couldn’t sell it better. And that’s one of my favorite things about it is you’ll know it’s working even when your sales reps, your BDR’s, anyone, when they come back to you; I remember just when I was a BDR, I’d always be like, hey, this is Sam. I’m calling from company XYZ. Like, do you have a second? They’re like, wait, what company? I’ve never heard of you. Our BDRs now will be like, I’ll get on a call and someone will know exactly who we are and what we do. And I can just bypass the first awkward 60s of trying to convince them to stay on the line because it’s like, oh, I’ve actually, I just checked you out. I just saw an ad, I just read an article or something. I’ve been meaning to talk to you all. Perfect timing. That’s how you know it’s starting to work, because they remember who you are and you’ve built that trust with them early on, so you’re making their jobs a heck of a lot easier, too.
(00:15:57) – And they will be appreciative for that, because that’s one of the hardest things to do is, is any type of like outbound sales rep is like that cold call. You’re honestly, you’re changing some of these, like, from being truly cold calls to I’d almost call it like a warm call because they have a sense of what you can help them accomplish at the end of the day, that makes them more receptive to taking that call once they hear who’s on the line.
(00:16:17) – Absolutely. Well, this is a lot of really great information, but I think the key takeaway is just with so many options in the HR tech market, obviously standing out can be a daunting task, especially if your technology doesn’t fit easily or neatly into existing categories, but I think it’s clear that while building a new product category in HR tech is challenging, it can also be a strategic move that can lead to market leadership, but only if done well and given the time to do it. So, does that answer the question, should you or shouldn’t you? I think there’s a lot of questions you probably have to answer on whether it’s the right move for your particular organization or not, but hopefully it gives people a lot of things to think about as they’re evaluating for their own companies. Is this the right move for us? So Sam, thanks so much for joining me on the The Demand Gen Fix and sharing your perspective and experience on this topic.
(00:17:11) – Yeah. Thank you for having me. This was a fun one.
(00:17:13) – Indeed. All right, well that does it for this episode. Tune in again next time as we talk more about marketing in the HR tech industry.
(00:17:23) – Thanks for joining us on The Demand Gen Fix, a podcast for HR tech workers brought to you by GrowthMode Marketing. I sure hope you enjoyed it. Don’t forget to subscribe for more perspectives on demand generation and B2B marketing strategies. Plus, give us a like, tell your friends. We’ll see you next time.
