Overview: In this episode of Digital Conversations, Garrett gives 3 keys to revamping your marketing strategy.
Guest: Garrett Mehrguth – Garrett is the CEO of Directive, a next-gen performance marketing agency for software companies. He enjoys speaking/writing on marketing, strategy, and business.
Billy: Alright, everyone, welcome to Digital Conversations today. Today, I’m lucky to have the great Garrett Mehrguth with me, I hope I didn’t butcher your name there, man. CEO at Directive, how you doing Garrett?
Garrett: Good, good excited to be here. Streamyard has my camera like inverse. So it’s kind of tripping with my brain, because I go one way and it shows the opposite, but I’m excited to chat with you.
Billy: Yeah, man, I’m excited. Before we get into it, just tell me a little bit about yourself and about Directive.
Garrett: Yeah, so I like to do digital marketing, growth, sales, kind of that whole world. I lead a performance marketing agency, we work mostly with mid-market and enterprise software companies. So SAAS firms. I’m mostly just helping them kind of figure out how do they grow? Whether that’s through paid social, organic, Google Ads, review sites, really type of any of their growth acquisition strategies. Yeah, we’re having a great time doing it.
Billy: Awesome. Awesome. And how did you get into it? How did you get started Garrett in marketing?
Garrett: Selling $5 social media calendars, on like on Fiverr. So, started there, then I got like a Hookah shop, a bunch of small businesses, like I did SEO got them to rank. Then we got like Allstate and started like working with the larger accounts and doing similar things. So kind of just hustling and working hard and trying to figure it all out. Yeah.
Billy: Cool. I like it. I like it. Okay, man. Well, when we talked about doing a podcast. One of the things that you brought up is like, hey. How do you really grow your own business? And that’s what you’re like, let’s talk about it, how am I and how you’re doing it at Directive? So I’ll let you go, but what are some of the strategies you’re using for your own marketing and sales teams to get new clients?
Garrett: Yeah, I mean, a lot of it I think I’ve done a positioning. Like marketing is really hard, when you don’t know exactly who you’re talking to. And I’m always impressed by myself and other people’s ability to like, not really want to limit themselves, we have this like, false sense that we shouldn’t choose a niche. Usually, it’s because we don’t have control of our pipelines. So we don’t want to say no to anyone, because we don’t know how to get someone. In other words, if you choose a niche, you actually have to start getting really good at everything.
Because you have to be able to literally create a brand, differentiate your product, and then attract your ideal customer, and you have to be willing to say no to everyone who is not. That’s a really scary thing to a lot of people, because currently, most their channels aren’t working. So they can’t imagine how they’d be able to get new ones. But the reason they aren’t working is because they’re doing it to everyone. So you get stuck in this like, spin cycle of almost doing their positioning, but then like bastardizing it at the last second because they get nervous.
It’s kind of people who go like 90% of the way there. But then say, well, sometimes x uses it, we do have that one account Y, and they’re amazing. And like, I mean, we could probably get more of those. So next thing, you’re back to being nothing for no one instead of something for someone and you’re like, why isn’t my business growing?
Billy: For sure, for sure. I really, I mean, it comes down to an idea. I forget who I heard this from, but they were talking about, when you get a group together to create something, you usually end up with, like the least offensive solution, or proposal or material. So it doesn’t really speak to anybody. That’s what I think a lot of us do, rather than just say, Hey, here’s my hill, I’m gonna die on. I’m gonna stick to this, and this is what I do.
Garrett: Yeah, and I mean, it’s, and if you get deep enough in like, you just depends what you make it about, right? So if you just say I do performance marketing for SAAS, you can get a little restricted, right? I mean, sure you keep going bigger accounts. So we work with some of the largest like, companies doing IPOs everything else in software. But you can still feel limited, right? But if you change it from I do performance marketing to SAAS to I help demand gen marketing solve their most complex problems related to growth. Once again, you can flip that positioning on its head, because you can make it about you, which is like we do performance marketing for SAAS, or like we help demand marketing solve complex problems.
And so you can start to expand service lines, you can do things like, right now, for example, Directive is fully focused on acquisition. But what if we decided to also help with activation, like right now we help you get more free trials. But if you don’t turn free trials into customers, then that’s on you. So you could start going vertical, and you’re like, vertically integrated in your kind of niche, there’s a lot of different ways to create new, exciting ventures for your business. So I think it’s frankly, like immature, and a lack of experience when I personally, for example, was so worried about niching, you know?
Billy: So Garrett, let me ask you this, how did you get to the point where you’re like, Okay, this is my niche that we’re going to focus on. And let Directive decide, here’s where we are, we’re going to be good at this?
Garrett: Well, usually you already are. That’s the greatest part about this whole thing. It’s like, it’s not like you’re going on this exploratory vision, and I had this brilliant idea, it’s more like I had the most common sense idea. And I think, the way I like to do decision making is I kind of give myself some space, put the kids down, wife’s going to bed, and I’m like, go out, grab a drink, sit in the corner with a piece of paper and like, write out all the facts of what I’m trying to solve. Like, during the daytime, I’m not the best at going deeper in my business, because I’m very busy running the business, running the people, running the different things.
I’m not really necessarily in the weeds of the business. But It’s a fast growing organization, it’s hard to ruminate on like a single concept. So what I like to do is I like to write out the facts, give myself some space. So you start in this journey, which customers pay us the most, okay, software clients, which ones have the best retention, okay, software clients, which ones are the least serviced by the overall market? Software clients? Which ones have the highest close rate? Software clients.
You start going down the list and you’re like well, damn, I think I should probably just make myself a software agency. And ironically, I bet you every person who listens to this could do the exact same thing with their business. The question is, do you have the audacity to kind of trust the common sense?
Billy: Yeah, I love it, man. I love it. So, you guys specialize in software and in acquisition. So there’s a lot of our listeners are in SAAS, what do you see people doing wrong when they’re trying to acquire new customers? Besides, they’re just speaking too broad to an audience. Anything, anything on a drill down that you’re like, Hey, don’t try this.
Garrett: Yeah, I mean, there’s a billion things. I think we all make mistakes every day. And luckily, when you’re a consultant, you get the perspective of many mistakes, whether they’re your or other person, you had a lot more exposure. So I’d say some of the biggest things that people are, I think, usually struggling with is they like to think they make data driven decisions, but they don’t. So like, we all say, nom once there’s ROI we will scale spend, like, once you see a little bit of return we will grow. I can’t tell you over seven years, how many people actually grow their spends like, not that many people actually grow even when they’re seeing success, because so many other things break, right? The customer success team can’t hire fast enough.
Engineers can’t fulfill the roadmap, AEs don’t have enough. Like, there’s a lot of reasons why you can’t just turn on growth. But the biggest thing is like most organizations, most demand gen marketing still don’t have a financial model that gives them confidence of where they should spend their next dollar, or how much their current dollars are making.
Like, they don’t have an LTV CAC model at the channel level so that they know the LTV CAC of Capterra versus Google Ads versus software advice versus LinkedIn, versus content syndication versus Programmatic versus webinars versus events versus SDRs, versus doing an acquisition of a new tool or launching an extension, or doing a new integration, and they have no way of deciding what to do other than gut.
And so and then when they do something, they have no idea how to tell if it’s working or not. Because they don’t know what their cost per SQL should be. They don’t know what their cost per MQL should be. And you don’t have blanket cost per MQLs, you have cost per SQLs that are a ratio of your acquisition cost.
As you start to learn the game, and you get yourself a little bit more organized with your financials and you like, if you can, like if you’re SAAS marketing, and you’re in house, I think the best thing you can do is build a relationship with the finance team, and most frankly, don’t have one. They again, given a budget, and they try to make it work.
Instead of trying to craft with the CFO, whoever, like, Hey, how are we determining this budget? What are we getting measured by? Is this aligning with what the board wants, or the CEO wants and, actually getting into the numbers. And I think that’s probably the biggest mistake I still see almost everyone in marketing make is, they’re starting to get better with sales, and they’re starting to work better with sales, but I don’t see them still working well enough with finance, and because of that, it’s really hard to push growth and make a case for why you should get the next dollar instead of sales development, or account executives, or whatever that is.
Billy: Yeah, that’s an interesting point. I’ve actually never heard that one that you need to, to buddy up with the finance team as a marketer, but it makes sense, like, now that you’re bringing it up, it 100% makes sense. What do you think, hey, if I’m a marketer, I’m like, okay, Garrett’s told me to do this. How do you get that relationship started? What’s the best way to extend the olive branch and try to try to get in their good graces?
Garrett: I think you should come to them with something that makes your life easier. Like I think the whole” I can I get five minutes of your time” thing is like, makes you, you don’t position yourself to have a peer to peer conversation, if you don’t know what the hell you’re talking about, or have no reference. So, I think it’s on my YouTube channel. It’s like, Garrett Mehrguth. on YouTube. I have like models that I put out in like spreadsheets. I’ve published them online, of like, how I build all my own models for like LTV CAC analysis.
So I would encourage you to actually, like read up on finance, and how does finance determine where to spend the next dollar? And then cool, can you build your own model? Then bring that to finance and say, Hey, guys, here’s what I’m seeing. What do you think about this? How does this align with your approach? How can I work with you to make your life easier. Come to them with something instead of like, hey, blah, blah, blah. I was really curious.
And then you’re just like a babbling fool where the finance person is, like, cool, now I got to deal with this person, right? Like, I don’t think people think enough about how they approach problems instead of like, what problems they’re approaching. Because the how you approach a problem is more important than like, how you do things is more important than what you do, if that makes sense.
Billy: Yeah, yeah, I got it. Awesome, man. So let me ask you, let me ask you another question, then. Obviously, we won’t get into building the models. Everyone, go check them out on YouTube, we’ll put a link in the show notes to where you can see this. But, just high level, if I’m a marketer, haven’t been thinking about my LTV to CAC, I’ve just been told, hey, you need to get conversions on the website, whether that’s demos, free trials, email captures, and worry about your conversion rate. And now I want to start thinking about, hey, what are the real financial numbers and implications behind this? Where where should they go? What should they start looking for?
Garrett: Yeah, I mean, I think it just goes to a very simple like, you have to be able to integrate your story. So you have to be able to stay like, how many impressions did we get? How many visitors do we get? And then most people can do this. They can do the impressions, they can do the visitors and then they can get to conversions. And then all hell breaks loose. But the second you send something from your website to your Marketo is like when 99.9% of markers die on the vine. So, we need to figure out how do we use Google click ID, how do we set up tagging?
How do we build out the right structures, sync things with campaigns, and we have to get really good at like Marketo, slash HubSpot slash Pardot and then integrating with Salesforce, bidirectionally syncing, enriching our data. And then taking all that from Salesforce to the opportunity, to close to one or two close last all the way back up to our impression.
And now we have a way to determine how much I can pay per lead. Now the reason this is so important, is because your tactics can’t advance. And you can’t get creative, unless you have constraints. And financials create restraints. In other words, like creativity is a result of having come up with an idea to fit into a certain reality. But you don’t have to be creative if you don’t know what your cost per lead is. Because you just can go after anything. And then you get your budget slashed because it didn’t work. You don’t get promoted. You don’t get your raise, you don’t know why anyone doesn’t value you. Why do they keep giving money to this other guy or gal?
You kind of play this other card. So to me, it’s all about knowing your numbers at a sales and financial level. Then coming up with creativity. And one of the coolest things I see working today is how do you get the money to acquire customers out of the platforms. Into the customers you’re trying to market to. In other words, like right now someone tries to get a better cost per lead without giving anything to their customer.
So like, we try to get more people to our donut shop by running Yelp ads, running Google Ads, whatever that is, and everything goes the ad platforms, but no value goes to the consumer. And that’s how B2B is, if you think about it, right, we advertise on Gartner.
But what is the end, we put all our money promoting, but we don’t give anything to the customer. Even though we don’t want the platform we want the customer. So that’s the thing that I see are most effective today are when you’re trying to decrease psychological friction and increase value to the customer. So instead of like request a demo video, why not just have him watch a free demo video. You can still get the demo video, but now when they give you their information. They get something in return. The majority of SAAS marketing companies ask for information and give nothing.
Billy: So I’ve got a story here. If you don’t mind me hopping in. So we ran a play with one of our customers, when we first started as just a consulting, we hadn’t built any software yet. And we helped them create a play using a chatbot. Where we send out an email that would lead them right to a bot. But the offer was, hey, come meet with us for 20 minutes.
And we’re going to give you a Yeti with a $25 Starbucks card. You can have coffee with us, we’re going to talk to you about our products. If it’s a fit. Great. We’ll talk some more if it’s not you got a Yeti, and some free coffee. Dude, that thing converted so well. We were at close to a 90% conversion rate on that. It’s because we gave him something like we weren’t spending the money on Gartner or on Google Ads, and it was okay, I get something of value. Yeah, I’ll listen to you. And it probably costs, I don’t know, like 40 bucks for each one of those meetings.
Garrett: But now the problem is the reason why people can’t give people things in their marketing is because it’s too expensive. Ironically, but they don’t even know how much they could pay. Yeah, so expensive, because we’re selfish people as humans. In other words, like giving someone something when you think you could get them with nothing means you’re losing something. But the truth is, you can’t. In other words, like right now my cost per lead, let’s say is 1200 dollars.
And I tried to get a lead from LinkedIn to go to a demo. It will cost me more than 1200 dollars to try to do that only because my conversion rate is going to be terrible. There’s no intent. I have the firmographics, but I can’t create an action, because my offer is asking them for something they deem valuable, which is their time, to get nothing in return. That or I could offer $100 gift card to take the call with us and get a cost per lead of $500.
Yeah, so it cheaper to pay someone $100 or not. And the irony is it’s actually cheaper to incentivize customers to meet with you than it is to not because you get so much leverage on your conversion rate. And I think it’s the biggest mistake we’re all making in B2B today.
Billy: Awesome, man. I love it. So what offers are you making? Are you seeing success with? What are you, what do you guys offer people?
Garrett: Yeah, I mean, so we’ve tried a lot of different values and tested them, like $50 isn’t enough value. Like people won’t take a meeting, if you’d say you can get a $50 UberEATS gift card. But once you get over $100, they’ll take a meeting no matter what almost you can literally buy the meeting for 100 bucks.
Billy: Cool, awesome. 100 bucks a meeting? I mean, if you’re selling something in, like, let’s say you’re even at $10,000 a year, or even two or three, 100 bucks for the meeting. That’s nothing.
Garrett: Well, yeah, for us, our average order value is in the hundreds of thousands, let’s say so yeah, why not pay a couple hundred bucks to get a meeting, if you can make 100,000. But so many people, it’s uncomfortable to give things to people. I don’t know why it is. But they refuse to do it. But it’s only because they don’t know the math. And once you do the math, it makes sense, that’s why I said everything starts with the financials. Because you can start to say, well, currently, we’re giving all of our ad spend to Google.
What if we gave 25% of that to customers and 75% of Google, and then we got more out of the 75 that we would have if we gave all hundred. And that’s the leverage part that you get from getting a great offer that drives your conversion rate, and then monetizes all your channels and brings dead channels to life.
Billy: Awesome, man. Awesome. Dude, this is this has been good. Is there, before I let you go, man, is there anything that you wish I would have asked you that I didn’t?
Garrett: Uh, it’s been fun. I think at the end of the day, I think we’re all working really hard marketing. It’s really difficult. Like I think marketing is one of the hardest things in the world. You have more data every day, but you still don’t have enough. Your goals are always growing. But your budgets don’t always match it, you’re always in these tough things. So I think, starting to learn about like human psychology. And how people like to work with each other is where you get your leverage. So gift giving is just leveraging reciprocity.
I can’t say that word, but it’s like getting typical, right? Like, when you give someone a gift, like when people want to say like, oh, how many people just want the gift card? They don’t want to talk to you? Well, nobody, if you train your employees to say, hey, look, I know you’re not here for the gift card your way to sharp of a marketer, what does that really help you with? Right? There’s a lot of human psychology that goes into why things work and how you go about it.
And I don’t think as marketing, we’ve studied that enough or understand it enough. I think we just tried to optimize, we try to like just squeeze the last juice out of Google Ads instead of rethinking the whole concept of what we’re doing. And so I think, really, for us to drive change and drive big results, we have to take our current perspective and try to take entirely different, like 180 it. And I think from those moments is when you start to drive that value.
Billy: Awesome, man. I appreciate it. Garrett, good stuff. If people want to continue the conversation, I know you’re all over social, all over YouTube. But where can they find you? Where can they get more information get
Garrett: It’s @gmehrguth on Twitter, Garrett Mehrguth on LinkedIn, YouTube, wherever I mean, shoot me an email. Yeah, always open to connect and help. We also have a great Slack community called Society it’s free of charge on the knowledge that goes on in that group for SAAS marketers, if you’re in SAAS marketing, you have to be part of that group.
Like the people are too sharp, sharing way too many things like today, one of the women in there she’s at one of the top SAAS marketing firms and she shared a really amazing like, dashboard she uses for auction insights and Google Data Studio to audit competitors. It was amazing. It’s all free. So if anybody else check it out, it’s pretty cool community with really sharp in house markers helping each other.
Billy: Okay, man, thank you so much. And we’ll chat later, Garrett
Garrett: Thanks, Billy