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![](\"http:\/\/www.marketo.com\/_media\/phil-fernandez-marketo-ceo-small.jpg\")
\r\nCustomerThink Founder\/CEO Bob Thompson interviews Phil Fernandez, President and CEO of Marketo, about Revenue Performance Management (RPM).<\/p>\r\n
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Interview covers the following topics:
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Interview recorded May 2, 2012. Transcript edited for clarity.<\/p>\r\n
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Transcript<\/p>\r\n
Bob Thompson:<\/b>
\r\nHello, this is Bob Thompson of CustomerThink, and welcome to another episode of Inside Scoop. Today, my guest is Phil Fernandez, CEO and Co-founder of Marketo, one of the rising stars in the marketing automation industry the past few years. Phil is a 30-year veteran of Silicon Valley, including leadership positions at Epiphany, Red Brick Systems, Metaphor Computer Systems, Masstor Systems and probably a few other firms, as well. <\/p>\r\n
He’s also the author of a brand new book Revenue Disruption<\/a><\/i>. We’re going to be talking today about the big topic of that book, Revenue Performance Management or RPM, for short. Phil, welcome to Inside Scoop. It’s great to catch up with you.<\/p>\r\n Phil Fernandez:<\/b> Bob Thompson:<\/b> Phil Fernandez:<\/b> And so, it’s really been a set of things that we’ve been thinking about as I’ve been building this company for a number of years, and it was time to sort of bring all the ideas together and put it down in a manifesto and say, “Here’s the big picture, here’s the big ideas, this is why people need to care.” It was time to sort of get those thoughts all together in one place where business executives everywhere could have a resource to say, “What’s going on here, what do we need to do, why do we care, and how can we win by adopting these ideas?”<\/p>\r\n <\/p> <\/a><\/p>\r\n \r\nWhat is Revenue Performance Management (RPM)?<\/b><\/p>\r\n Bob Thompson:<\/b> Phil Fernandez:<\/b> It was just a few years ago that all buying really started by people talking with sales reps. There just was no other way. But over the last 10 or 15 years in an accelerating fashion, buying has now shifted to the web and it’s now even more rapidly shifted to social media. What that means is that buyers, the people who are actually choosing to put their money down, are acting and relating to people who have something to sell in a very different way. And that’s either a challenge that’s a disruption to the way traditional sales and marketing teams have worked that is causing some to become less efficient and some to seize the moment in change to become more competitive and to grow faster. <\/p>\r\n RPM or Revenue Performance Management is really about how companies need to react to this massive global change in the way buying takes place, and how they can seize the opportunity of that change to grow revenue faster. So, that’s the big idea. And I think every top executive, CEO, CMO, head of sales, CFO has to wake up in the morning and think about how to achieve revenue growth. And I think this is a set of ideas that really give all of them a guidebook for how to do that.<\/p>\r\n Bob Thompson:<\/b> For a presentation I’m doing, I came up with, I believe there’s 20 different acronyms and buzzwords, and they all claim to grow revenue, cut cost, improve the customer experience, and they’re all something that CEOs ought to pay attention to. So, what’s distinctive in your mind about RPM versus what people have been doing? <\/p>\r\n Phil Fernandez:<\/b> <\/p> <\/a><\/p>\r\n \r\n QlikTech Uses RPM to Accelerate Growth<\/b><\/p>\r\n Bob Thompson:<\/b> Phil Fernandez:<\/b> So, really driven from the top, they adopted an RPM strategy that said that they were going to create a center of excellence for their global organization in marketing to help them master finding leads online and the web and in social media, and to teach people in Turkey and in Italy and the United States and in Sweden and Japan and all over the world how the marketing teams can use the web and use social to find more buyers. <\/p>\r\n Then they changed the relationship between buying and selling so that marketing was held accountable for delivering more warm, ready-to-buy leads to sales, and sales was held accountable to spend their time calling those warm leads, rather than doing cold calling and prospecting. And in exchange, sales took higher quotas, marketing took revenue quotas, and they’ve been able to continue to grow as one of the fastest growing analytics companies really of all time, with a wildly successful public offering last year and continued growth. So, that’s a company that basically said, “We need to fundamentally empower our marketing organization globally, we need to hold them accountable for producing many more leads than they did before. We need to hold sales accountable for taking those leads and sales accountable for taking higher quotas and driving faster growth in their company as a result. So, it’s just a classic example of how this works in a big company.<\/p>\r\n <\/p> <\/a><\/p>\r\n \r\nMarketing and Sales Alignment<\/b><\/p>\r\n Bob Thompson:<\/b> Phil Fernandez:<\/b> But the basic idea, Bob, is that buying has changed, that the buyer makes a decision about how they’re going to interact with a possible vendor on their own terms. And so, a buyer might engage in social media and ask their friends about a possible vendor. That probably interacts with marketing. They might come to a website or click on a Google ad that interacts with marketing and say, “Pick up the phone” or “Send a text message to a salesperson,” they’re interacting with sales. So, in today’s world unlike even a few years ago, the buyer is making the decision about when and how they interact with marketing, when and how they interact with sales. And frankly, they interact with marketing a lot more frequently. <\/p>\r\n So, what that’s done is it has brought forward this ages-old issue of dysfunction between sales and marketing. Where it used to just be an irritant, now it’s actually disrupting the buying process. And so, it now says, “OK, corporate executives everywhere, it’s time to really step up and think this.”<\/p>\r\n Bob Thompson:<\/b> <\/p>
\r\nGreat to be with you, Bob, thank you very much.<\/p>\r\n
\r\nAll right, so today we’re going to be digging into RPM and try to understand what it really means, why business executives should pay attention to yet another buzzword, and hopefully, talk about some keys to success, as well. But first, I just wanted to congratulate you on your new book. I know how much work that is. I’m actually writing a book of my own this year, and it’s a tremendous amount of work. I’m one of your early customers; I’ve been reading it on my Kindle, and it’s really excellent. Could you share a few thoughts on why you wrote it?<\/p>\r\n
\r\nGreat, thanks, Bob. Well, it’s just been a thrill to actually have this book come together and be now published out in the marketplace. As we’ve been building Marketo, really the founding principle from when my co-founders and I started the company four or five years ago has been an abiding belief that there’s just a sea change happening in the marketplace that’s driven by web and social media and just the changes in the whole digital marketing economy. But this was a big, big idea and a big wave that was going to help us build a business, but was going to impact every business. <\/p>\r\n
\r\nWell, we’re going to touch on some of the things you talk about in your book. Let’s start with the very basic. Please define for me Revenue Performance Management, and if you’re pitching this, say, to a CEO, a VP of Marketing or executive in charge of sales, why should they care about it?<\/p>\r\n
\r\nFirst of all, Revenue Performance Management is not a piece of software. Let me get that out on the table. Revenue Performance Management is a set of ideas about how companies can grow and accelerate revenue growth by taking advantage of these very broad changes in the way buying and selling takes place in our economy. <\/p>\r\n
\r\nAll right, but when you say “revenue growth,” you’re basically talking about a strategy to grow revenue in this new world of empowered buyers. I could argue that, well, why not build better products? That would grow revenue. Why not improve the sales experience. That would grow revenue. So, what I’m struggling with a little bit, Phil, is what exactly is different about Revenue Performance Management when people have been hearing about CRM and other terms for years? <\/p>\r\n
\r\nWell, I think the roots of RPM are, in my view – and while I use the term, “RPM,” I should state this is not a passion to create a buzzword. This is a set of ideas about the way buyers relate to sellers the way marketing and sales teams relate to each other and work. And the ideas are about how people and organizations and buyers and sellers work with each other. It’s not about a buzzword. And I think in many ways it’s bigger because it’s a more strategic set of ideas. As I said, it’s not about a piece of software, not about a single thing to do. I like to draw the analogy to Six Sigma. We saw in the 80’s and then more profoundly in the 90’s when somebody like Jack Welch of GE rededicated their entire company to excellence through Six Sigma. That was a journey he sent that company on to reinvent manufacturing, to reinvent quality, to fundamentally change their long-term business economics. And I think RPM and Revenue Performance Management, that’s the analogy I draw, is this is a big set of ideas that executives and business leaders need to take advantage of to generate long, long-term growth.<\/p>\r\n
\r\nOK, fair enough. Maybe we can approach it a different way. Let’s talk about an example. Do you have one of your customers, perhaps, or a company that you know about that you feel is at least trying to approach this RPM idea in the right way? Tell us about that company.<\/p>\r\n
\r\nYeah, we have 2,000 of them, but I can pick one. I love to talk about QlikTech, which is a super fast growing BI, business intelligence and analytic company that’s just been growing like a weed, much faster than the older line companies like Cognos and the like. And they’ve really driven from the top of their organization, the CEO, the head of sales, head of marketing, have adopted a pervasive RPM technology. What they saw was that they wanted to sell many more deals much faster, but their sales team just couldn’t prospect and couldn’t cold call fast enough to grow the company at the rate they wanted to. And they needed to shift the center of gravity to their marketing team for finding prospective buyers. <\/p>\r\n
\r\nGreat example. As I talk to other people in the industry, the subject of marketing and sales alignment comes up again and again. It’s kind of an age-old issue, especially in business to business, where marketing and sales, in some cases, are marching to different drummers, so to speak, different goals and objectives and so forth. Would you say that a core tenet of RPM is this more of a collaborative effort of marketing and sales with at least some mutual goals that they’re both marching toward?<\/p>\r\n
\r\nAbsolutely, and it’s not just business-to-business. I was in New York City a couple weeks ago, and my driver was actually, by day, an insurance salesman and was just talking to me about the sales and marketing disalignment in selling life insurance. So it’s everywhere. <\/p>\r\n
\r\nThe issue has been festering for a long, long time, as long as I’ve been in this industry. It’s been festering, people talk about it, but they haven’t really changed. It’s like all things, all major change is driven by the market and by customers. And so finally, we’re seeing changes in how organizations behave, at least those that are progressive because if they don’t change, they can’t really be responsive to how buyers want to work. <\/p>\r\n