Joseph (Joe) Vesey uses a lot of inputs to make decisions. During our interview he listed NPS scores, revenue, order numbers, customer feedback, sales feedback, and pricing data as information used during the planning process. But at the end of the day Joe cares most about understanding the actions his marketing leaders are taking to reach the goals set forth in their corporate plan.
He understands that marketing is an art and not a perfect science. And he understands that marketing in emerging markets and marketing new products is a learning process. So he cares most about the logic and thinking behind marketing actions. This hints at his ability to listen.
The leadership quality I observed is based on being able to move everyone forward, whether it’s the marketing leaders he manages or the other senior executives at Xylem.
Joe talks about the “Say-Do” ratio. It’s the ratio of what you signed up for and what you actually accomplished. He explained how a high level of accountability allows the marketing function to drive bottom line revenue growth.
There’s a passion for what he’s talking about, too. Joe speaks with urgency and relevance in his voice. He could be a sportscaster if he decided driving marketing at a company that delivered $1.2 billion in Q2 2017 revenue, up 25 percent year-over-year including the impact of acquisitions, was no longer interesting.
I can tell Joe is the hands-on type of leader with a deep knowledge of his market. Xylem is a water infrastructure solutions company, spanning industries including Public Utilities, Commercial Building Services, Residential Building Services, Industrial and Agriculture.
Ask Joe about water infrastructure in regions around the globe and he can talk about the water issues each locality faces, a true sign of expertise in the water infrastructure market.
During our interview Joe explains his approach to marketing planning and above all his philosophy on the marketing function as an engine for growth. Read it in his own words below.
Let’s start with the goals you track that feed into your planning process. Tell me about those.
The goals we track first and foremost start with the ability for our company to hit our growth targets, including a revenue number and an order number. That’s our true north star, we can do a lot of great things but if we can’t move that needle we’re doing something wrong.
We look at revenue and order numbers.
We look at Net Promoter Score (NPS). This score tells us whether a customer is likely or unlikely to recommend us to a peer. We ask them why they gave us that score. It might be an issue in supply chain, customer service, delivery time, or lack of engagement with their salesperson. The marketing team owns and quarterbacks this and the information feeds into our actions.
Next is sales barometer. We ask our sales team if they feel they are winning more, the same, or to a lesser extent. We ask them why they gave us that answer. We may find the feedback is that our order quote turnaround time is too slow. Or they have to spend too much time in the office and don’t spend enough time with the customer. Or that Salesforce setup is too complicated. This feeds into our marketing actions. So we look at what our customers are saying and what our sales teams are saying. Let’s understand that and then go action those items out.
We look at market share data. We want to know what our relative growth rate is compared to competitors, or compared to market growth rates.
We look at price. Price is important. A good price number is if you can drive more selling price than the inflation you’re taking on in COGS. This is called the value gap and if that’s a positive number then that is a great business. Price relative to the market place and price relative to the COGS point of view is what we look at.
We look at three brand metrics. For example, unaided awareness is the percentage of respondents who can recall your product, brand, or advertising without being assisted. We look at brand choice and ask people if they have considered buying brand A in the past 12 months. Lastly, we look at brand preference, asking whether they show strong preference. We ask, everything being equal, or even willingness to buy at a higher price, what kind of brand preference do you have?
We do a lot of brand work because we are a house of brands and a branded house. We have put effort into the Xylem brand to have it stand out in the marketplace as a brand with a unique set of characteristics. While at the same time we have product brands that have been around for 100 years. We do a lot of brand management to understand how well received our brand is in the market.
It’s great to hear such a large company being focused on measurable outcomes. Where does being data driven come from?
It goes with a focus on revenue and numbers. Every sales person in our company has a number on their back. For example, if you’re a sales leader in a certain territory and your number is $3 million dollars to close this year, you feel pressure to make that number every quarter, every day, and every hour. We want the same kind of accountability in marketing.
So every marketing leader has a lead generation number on their back. We work together to do the math to understand how many people we need to find to hit our number.
Let’s say our company wants to do $10 million in growth, the marketing leader does the math to answer the question of how many people interested in purchasing Xylem do they need to find to support that growth. The math is essentially average order size and number of people on a deal. Put that through the realization rates. You have to find a lot of people, and that was an eye-opening moment for our teams.
This is how I want our marketing teams to be thinking: How many qualified leads do I need to deliver to support our growth targets?
That feeds into planning because now you have to be crisp in your messaging and where you place that messaging. And if you don’t hit your target in January, what’s the corrective action?
That’s the kind of accountability we’re trying to drive here in the marketing function. They know the number, they are tracking it and they are actioning accordingly. And it’s the same kind of accountability our friends in sales have been living for a long time.
Managing a complex value chain in a global market must present challenges in planning. How do you address that?
We have vertical owners in each geography. For example, a marketing leader owns the municipal market in India. And every vertical owner has a marketing plan that answers how they will support a certain amount of growth.
We are moving towards having vertical portfolio owners. So everything in Xylem’s portfolio that goes into a segment in a geography gets owned by that vertical portfolio owner.
Our marketing leaders have plans, which include information on how the municipal market works in that geography and the market’s size and structure. The plan outlines the actions we are taking to drive that $10 million in growth in that segment.
Within these marketing plans we anticipate moves by our competitors. We’re seeing that one of our competitors is forward integrating into one of the channels and buying channel partners.
We add discussion on moves made by competitors, anticipating their future moves in planning sessions. This allows us to respond in faster ways.
It’s not complete scenario planning, but it’s in that direction. It’s almost like a failure modes and effects analysis. When you ask a team to drive change you need to ask what the failure modes are.
How will you know it failed, what are the failure triggers, and what do you do when it fails?
This way you don’t need to think about it. You should immediately do what’s in your corrective action when you see that happen.
That’s what we do for all the markets. We will enter that market on a direct basis, selling to the end-user, or indirectly somewhere in the value chain, as well.
It sounds like your marketing teams are very decentralized. Can you talk more to that?
Although we are decentralized, we have a shared set of tools for developing marketing plans. We have a common way of measuring NPS, gathering sales feedback (sales barometer), doing product launches, and doing voice of customer studies.
Despite our common tools, the fact is, water is a very local issue. The challenges and market structures of any of these markets are unique to locality. Issues in India are unique to India, and water issues in China are unique to China.
Local needs vary, even in the US. Take California, due to its five-year drought, wastewater reuse is highly important to the municipal market on the West Coast. And that’s not a priority issue for the rest of the country.
You need to dial into the local needs. It’s watershed to watershed.
Your vertical leaders must be able to do both demand and channel partnerships, how do you hire for someone who can do both?
One, we need leadership qualities. Two, we need functional expertise in terms of understanding the marketing choices and the marketing triggers, understanding which levers you will pull for what outcome.
So we look for a strategic orientation to marketing and, again, we look for accountability. You better know how to spend your marketing resources to generate leads.
No longer can you be good at one thing. You must be able to drive revenue up and take costs out. You have to be able to do both. You have to understand the strategic elements of marketing, the market you’re serving, the segment of customers, and how we’re doing performance wise, while understanding the tactics to drive new leads.
We need people who can understand and do both (strategy and demand generation). The sales and marketing leaders for a market segment work hand-in-hand. They share the same single goal to hit a target.
Is it hard to fill that marketing role?
What I just described is the perfect person. If we wait for them we aren’t going have anyone on the team.
It’s context and tradeoffs. It comes down to the makeup of the team and the makeup of the leader of the team. In some cases we overhire for the strategic skill or we overhire for the demand gen skill, or we overhire for the leadership quality.
For example, they could be light on functional knowledge but they are a great leader. So we would look at whether other people on the team can fill in those gaps. We look at the team makeup. That team makeup makes the difference.
We have a great plan for hiring but there’s a practicality to it. Everyone has a great plan until they get punched in the face, according the Mike Tyson theorists out there. And that’s what this is.
That’s the practicality of it. We know on paper what we’re looking for. But finding that one perfect person is really hard to do, so let’s just start playing the game.
Within the hypothetical “perfect person,” we look at what are we trading off in order to put together a team.
Tell me about how you approach budgeting.
For lead budget, I don’t give money that you had last year because you always had that amount. I give budget to marketing leaders based on:
- How much growth your team signed up for.
- How much growth is expected to be covered by marketing. And we usually cover all of it.
- The results from the lead math that determines how many leads need to be generated to hit that growth target
That’s how we allocate resources. But this is a learning process. We learn. Maybe in certain spots it works differently and we’ll make the adjustment. But this is the starting rationale for budget.
I love the “Say-Do” ratio you brought up in the pre-interview. And the question of did you do the things you signed up for. Is that baked into the culture? How did that come about?
It comes from climate of accountability that we want to drive in the function. We want the marketing function to drive growth. That’s where the rhythm of reviewing the numbers come from.
You know the saying, “In God we trust and everyone else bring data.” But at the same time we’re not going to get so caught up in measuring everything that we end up not taking action. The measurement system begins with orders and revenue and there’s good repeatability and reproducibility around that. If there wasn’t the SEC would have a problem with that. But in the other businesses or markets the marketing measurement isn’t perfect.
My point to the team is don’t let “perfect” get in the way of moving forward. What does the data tell you, what are you learning, and what are you going to go do?
What are you going to go do? That’s what we’re interested in. Of course we add it all up at the end of the year to make sure we hit the revenue numbers. We look at NPS and sales barometers, and if it moved in the right direction.
We review the numbers, but we aren’t going to argue about the numbers. The numbers give you a flavor of what should be done. What matters is whether you are driving action and change.