Marketing planning & forecasting with Emily Kramer

Ep09 - Marketing Planning & Forecasting with Emily Kramer - Part 1

Episode Description

In this episode of The Revenue Stream, I had the chance to sit with Emily Kramer, co-founder of MKT1 and a seasoned marketing leader, and dive into the essentials of planning and forecasting.

Emily spoke at length about planning and forecasting in UserEvidence's podcast with Mark Huber, Adam Goyette, and Jeff Ignacio over here. And we thought this needed a longer and a more detailed breakdown of how to do planning and forecasting. That's why, we're launching this in two parts.

In today's episode, Emily shared the importance of setting KPI, project, and ops goals (KPO), how to navigate the complex relationship between planning and forecasting, how to think about long-term strategic bets, and teams you need to involve in your planning process. Join us for a deep dive into how businesses can set themselves up for both short-term and long-term success.

I had so much fun chatting with Emily in this episode and I hope you enjoy listening to it just as much.

Stay tuned for Part 2 where Emily helps me improve my forecast live on the podcast.

Show Notes

Follow Emily Kramer: https://www.linkedin.com/in/emilykramer/
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Learn more about MKT1: https://mkt1.co/
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Follow Vikash Koushik: https://www.linkedin.com/in/vikashkoushik/
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Learn more about RevenueHero: https://www.revenuehero.io/
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Emily's newsletter on Annual Marketing Planning: https://newsletter.mkt1.co/p/annual-marketing-planning
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Episode Transcription

‍Vikash: Welcome to another episode of the Revenue Stream, a podcast by RevenueHero. I'm your host, Vikash Koushik, and today I have with me Emily Kramer. I'd be surprised if anyone tuning in isn't aware of Emily Kramer. In the rare case that you aren't, Emily is the co founder of MKT1. She's also the author of a well known marketing newsletter that she puts out at MKT1.

I highly recommend checking out her newsletter because every time I read it, I learn something new and they're super actionable. Even for a topic that's extremely strategic. So I recently pinged Emily and, I told her that, Hey, I'm doing planning and forecasting for the first time. Can you help me improve it?

And she was like, yes, let's do it. So in today's episode, Emily and I will be talking about all the things you should and shouldn't be doing when it comes to planning and forecasting. If you hear us talking about a spreadsheet, stay tuned for part two, where Emily will open up a model I created and walk me through how I can actually improve it.

I know this is going to be a masterclass in planning and forecasting, and I'm super pumped about it. Emily, welcome to the show. I hope I didn't butcher your introduction.

Emily Kramer: No, you did great. I would say it's a model. Like a model is a spreadsheet, right? You're selling yourself short on what you've built, which anytime you can change a couple inputs in one or two cells in a spreadsheet and it changes the rest of the spreadsheet, to me, that's a model.

So you have a forecasting model. If. So you're there, right? There's always room to make it better. And I think the thing about forecasting is that it can be really scary, especially if you're not a spreadsheet and math person, but once you have it, it can be such a great tool to help you prioritize and look at the impact of any marketing activity you're planning to do.

And so I think that. It's worth doing for tons of reasons, and I think anyone can do it just with some basic reading and watching of different things. So hopefully this becomes one of those things that's useful, and the intro was great. Just a little bit more about me. I led marketing at a number of companies, a number of startups before starting MKT1, sometimes called MarketOne, sometimes called MKT1, terrible name.

Long story someday, maybe it'll get changed. I don't care how you say it is the point. I'll probably call it both in this podcast. But anyway, prior to that, I led marketing at a bunch of startups. Always joining as the first or second marketer and then having the opportunity to scale those teams as the head of marketing.

So I was at a company called Ticketfly early on. That's now part of Eventbrite. And then I was at Asana as the first marketer, when it was around 35 people built that team up over four years leading it. So early days building that out was a really amazing experience in growing my own marketing skills and leadership skills, and still a lot of things we did there shape the team.

My newsletter and things I talk about today. and then I went to a small company called Astro leading marketing and support. as the first business hire, they got acquired by Slack before their series B. and then I was at Carta where I joined when they had no marketing team and they had a large sales team and built up marketing from scratch, but at a later stage company, they were serious, seriously.

When I joined. So through those experience, I've seen sales led models, PLG models, early stage, late stage, the whole nine. And so I've used that to write a newsletter, advise and invest, which is what I do today.

Vikash: Emily, I think a fun fact, I don't know if, if you're aware of this, I think back when you were at Asana or probably just when you had left, I think you did an AMA and that was like my go to resource.

I was working at a small company that was also in the project management space, but going after developers very specifically. So that was like, wow, this was a wealth of knowledge for me.

Emily Kramer: Do you remember where I did the AMA or like, what was it about Asana or was it about like marketing in general?

Vikash: It was about your time at Asana and how you approach marketing at Asana.

I think it was at growthhackers.com.

Emily Kramer: Oh yeah, I remember doing that. At that time I hadn't done as many AMAs or, I mean, podcasts weren't as big of a thing, but I hadn't done as many of those types of interviews. So they stand out. Now, no offense to people who have had me on their podcast. I appreciate it.

I'd be like, which one was that? But your career grows over time, but yes, I remember that vividly and answering a lot of those questions and growth hackers was an amazing resource then general with a lot of those types of things. So that is a fun fact and a throwback for me. I hadn't thought about that in a while, but I'm glad you read it.

And you know, here we are years later. Doing it live. All right, let's get into it. This is all very top of mind. One, because when we're recording this, I had just sent out a newsletter this week, I'm planning to forecasting newsletter last year, sending out another newsletter on planning next week. And it's fall, which, you know, in the business world is annual planning season.

And so I am primed and ready. Cause this is what I've been thinking about. More than I'd like to admit over the past few weeks as I've been writing these newsletters. Yeah, perfect timing top of mind So let's let's dive in and do this

Vikash: Amazing Emily and I think before we get into the speed spreadsheets and things like that I think one thing that that has always sort of like Sort of like bothered me or I couldn't wrap my head around is like, Hey, if I have a plan, I tweak something over here and I put it on the forecast.

It doesn't make sense over there. And then I have to come back over here. Like, it feels like planning and forecasting go hand in hand. And it feels like a chicken and egg problem, right? Like, which comes first? Like, which do you do first? What is more important and that sort of stuff, right?

Emily Kramer: It's interesting.

I don't see it as a chicken and an egg problem at all. So to me, you have historical data. Hopefully if you're an early, very early stage startup and you don't have historical data, it's very hard to do bottom up forecasting, which we're talking about, which I'll come back to. In a second, but you have that, and maybe you have a shell of your model, or you built a model last year.

So you have that, but like, push that aside because model is somewhat useless. If you want to, if you want to parallel path it and have someone putting in the historicals and using that to build a model fine, but before you can go in and. Manipulate the model or add assumptions, which is really what makes the model a model is that you take all these assumptions, like, we're going to launch this huge campaign in June that goes in the model, or we are going to do a lot of work to improve conversion rates.

That's an assumption that goes into the model. We're going to run a event or a user conference or some such thing in September in the model. So. To me, not chicken and egg, because you've got to figure out what those big projects are, and those big changes are before you go play with the model. So if you want to have a shell of it built first, but before you can go in and move around these levers in the forecast, or these inputs, you need to make a plan.

And a lot of times, people mistake that, so I get why you might think it's chicken and egg, as I said. But they mistake, Oh, I'm really just trying to go in and like get a target. But how can you get a target if you don't know the big things that you're going to do? So to me, planning is not just doing a forecast or coming up with a target pipeline goal or MQL goal, or even revenue goal.

It's actually going, and this is what I just wrote about. It's actually going and saying, what is our vision and our marketing strategy for this year? Like, what's the plan? And in my newsletter, which I'm sure you'll link to in some capacity in this, I talk a lot about that. What are our goals for the year?

Not, you're like, how can you set goals for the year? If you haven't done the forecast? Well, your goals shouldn't just be numbers, KPI goals. You can put placeholders for, we're going to be tracking again, conversion from this stage of the funnel to this stage of the funnel this year and leave a placeholder, but your goals should also include the big projects you're hoping to accomplish those things.

I just mentioned that conference, that huge product launch, you know, that positioning redo that affects everything on our website, that huge campaign, whatever you should have goals, big projects. Because they won't necessarily, the results won't necessarily show up in your KPIs in the immediate. So those projects are setting you up more for long term success.

And then you should also have some goals for the big foundational work that needs to happen to enable you to hit these goals. Because if you don't plan for those, You're going to run out of time to hit your other goals because that foundational work, the new tools, the product marketing research, the audience research, name, any other foundational thing, making this forecast that takes time.

So you've got to block off times for that. And the best way to do that is. So I recommend, this is fun to say, I recommend setting KPO goals, not just KPI goals. KPO goals are KPI goals, project goals, and Ops goals. It just worked out that way, that it was KPO and KPI. I was like, this is so convenient. I have a phrase now.

Yeah. So you want to be setting those goals and to get to those goals. You need to figure out what those big initiatives are and the big things that you're going to do. And that list is probably going to be longer than your goal. It's just, what are the big things, timeline them out for the year, the big things you're doing.

And then you can go in and put these in your plug these into your model and get the exact numbers to put into those goals. So that's my like, overall speech on planning. The one thing I should have set up front, but I didn't is what's the goal of planning, which is very meta because you're setting goals during planning, but what's the purpose of planning.

The purpose of planning, let's see, I'm not reading this off a page. Let's see if I can get it, get it right. The purpose of planning is to figure out how you're going to win in the short term and hit the short term goals that are needed to hit the sales quota. To figure out how you can continue to succeed in the longterm and set yourself up for success in the longterm beyond this quarter, this is where marketing becomes not really like sales as much and more like product or the big bets, things you're doing to set you up for in the future.

And then figuring out how you can do all that efficiently, and that comes into how much am I going to spend? And what are the conversion rates I can get? And how can I approve those? So what can we do plant the point of planning? What can we do to hit the short term revenue goals? What can we do to set ourselves up to hit long term revenue goals?

And how can we do that efficiently? That is the point. And the secret to doing that is to figure out what are your strengths as a company? What are your advantages and how can I accelerate those advantages through these big projects and changes? And so that's what planning is. And I should have started there and I didn't.

And so apologies, I talked in the wrong order. You could do some fancy editing or you can just leave this in here as like, you know. Sometimes I too don't list the goal and purpose first of what we're talking about and you should know.

Vikash: I like Christopher Nolan movies and it goes in like different time sequences.

So I think I loved it.

Emily Kramer: Cool. All right. Well, it all worked out. So that's planning. And so forecasting is just one piece of those and one more like preamble thing to say before we get into talking about this forecast is there are two types of forecasts using companies and you need both and early days, again, early stage startups.

Maybe you don't have the historical data to do the bottom up forecast, which I'll explain what that is in a second. But once you get to any sort of scale or have that historical data for a year or two, you can do both types of forecasts. And one is a top down forecast. This is where sales, mostly finance and like the leadership team, but sales uses this number, come up with a number that they want to hit in terms of revenue in the next year.

You may not know how this happens. They might not even know how it happened. They might have just said, what's our revenue this year times 2 or times 3, or what's the revenue number we need to hit to feel like we can raise the next round of financing. So, that number is kind of the, like, pie in the sky dream number.

And so if your revenue this year is 1, someone might come and say, we want it to be 5, or if it's 5, we might come and say, we want it to be 12. 72. And you're like, I have no idea how you got to this number. And again, they might not either, but that's not the point. That is what they want you to hit. That is the dream number to hit.

Or the realistic dream number that is one forecast and they'll kind of like use that to go backwards. It's called a top down forecast. So they're starting at the top line, the revenue. They're going down and saying from this, what do we have to do at every stage of the funnel? Like, how many opportunities do we need to get back to that number?

A bottom up forecast is the opposite, which is basically saying if we start at top of funnel. If we start by, depending on if you're mostly doing inbound or outbound, the number of accounts we're going to reach out to, or the number of accounts we're going to engage with on the outbound side, on the inbound side, how many people are going to come to our website, that top of funnel.

From there, if we use the conversion rates we have today, plus improvements in those conversion rates. Plus increases to that top of funnel number. What number do we get to at the end of the line? And sometimes when you do that, you're like, wow, they must've put a lot of thought into that top down target because it's exactly the same, but that never really actually happens.

Sometimes it's within 20%. Sometimes it's 50 percent I've seen. And then you're like, well. Crap. We're not going to get to that number. It's not possible to get to that number with our TAM sometimes happens. It's not possible to get to that number unless our conversion rates are 120%, which is not possible.

So then that leads to big conversations between the leaders of the company. And that is often uncovered by marketing in combination with finance. If you have a team there or ops, if you have that team. Making a bottom up forecast because in many organizations, even late stage organizations, they don't have that.

And I'm like, I'm looking at these revenue growth and I'm looking at your TAM and I'm looking at your market share. And I don't understand how this is feasible unless you're launching new products, the new audiences. And so the bottom up forecast is critical to making sure those revenue targets are actually achievable.

And then saying, well, what do we have to do to make them achievable? And so these two things need to come together. I'm not even saying one is better than other. I'm saying you need both. And then you need to figure out the Delta between the two, a parallel for marketers that like analytics is sometimes you'll have to analytics tools, or you'll have the performance from an ad platform and the performance from.

Shown in whatever analytics tool you use or Google analytics, but these things don't match up. And if it's in like within 10%, you're like, okay, there's like a margin of error. That's like different methodologies. We'll get somewhere in that range, right? Or somewhere in that range is correct. But if it starts to be 20 or 30 or 50%, you're like, we got a big problem here.

We got to like, dive into the surface. It's the same thing with, with these two forecasts. All right. So that's my monologue on the two different types of forecasts. One fun fact, and then I'll stop my monologue, is that people call bottom up forecasts, bottoms up forecasts, which drives me nuts, and I have LinkedIn about this.

I need to do my, like, annual LinkedIn reminder, that bottoms up is something you say when you, like, have a beer. In a big mug and you go bottoms up and a bottom up forecast is the forecast here. And so this doesn't matter at all. It's just like one of my little like pet peeves. I'm like, oh, it's not bottoms up.

It's bottom up. So that's the difference. But if you do forecasting well, this is really cheesy. At the end, you can cheer, say we did it. And then you can say bottoms up. So that's my annual reminder to people. That's the semantics. I watched someone comes back to me and they're like, Emily, you're wrong. It actually is bottoms up, but I don't think so.

So that's my speech on that.

Vikash: If I'm looking at, hopefully this doesn't happen, but if I'm looking at my forecast, like say six months down the line, I might be thinking like, did I do that? After bottoms up. So that's my,

Emily Kramer: yeah, exactly. Did I do that bottoms up? Like, what was my mental state when I thought that we could get to that number and agree to it?

We've all been there as well. And that's why I like, and you have this in your forecast, which we're going to look at in a second. You make multiple iterations, you make sort of a base case. This is like, if things continue going the way they are and we add in a few additional projects and we add another headcount and can increase our bandwidth on what we're able to do, like, this is what we'll hit.

And then if things go really well, and we like crack the code on a new channel or crack the code with an amazing content idea or brand idea. This is what can happen. And then you can also have a down case, which is like, I was bottoms up when I made this, so let's have the down case. Things don't, those projects don't pan out.

Those experiments don't work. And we're kind of just left with the same status quo growth that we have today.

Vikash: Emily, I have two follow up questions before we can dive into the spreadsheets. One is like, I love how you, you know, ops is sort of like super critical as a part of this entire process. Like one thing that I.

This is my strong personal belief is that ops is sort of viewed as this plumber that you just bring in when things are broken and very rarely you sort of like use them as, you know, to think of strategic initiatives and things like that. So, with that said, right, like ops, I love that.

But do you also think, say, for example, if you're going after an SMB market, right, like 5k ACV. Hopefully 5k ACV, hopefully you're closing them within the month, right? Your sales cycle is hopefully not too long. Two questions there, like for you to sort of like hit a larger number and if your time is like super small, ideally, shouldn't you also sort of like involve product in, into that mix as well?

Like, Hey, the only way we can sort of like hit the numbers that we want to is if we build a new product that goes after a slightly different audience and sort of like, see how we can upsell, cross sell and all that stuff. Right?

Emily Kramer: Exactly. So, yes.

So part of what I was saying about how this isn't chicken and an egg, very chicken and egg. I've now said that like 27 times. So thanks for putting that phrase in my head. And now I've said it a lot of times. The first thing you need to do before you forecast is do these planning exercises and a lot of the planning exercises involve cross functional teams.

And so planning for your big initiatives, one of the easiest things to fill into. I think every team should have, you know, no matter how big you are, like two, one to four, let's say one to four. Cause I said any size big bets a quarter, because even when you're a large team, you want one all hands on deck and you want that focus.

So you want to have a few, a small few less than five of these big initiatives, more than one of these big initiatives every quarter, they can span. They don't need to be evenly mapped to a quarter, but roughly, you know, during the year and. The easiest thing to fill out on that list is product launches.

Like this product launch is going to happen, but also things that tend to slip because there's so many people involved are product launches as well. So one thing I like to do in my forecast is I've planned and I've said there's going to be these big initiatives for the year. One is going to be this product launch that we're going to work on and we expect this impact.

And I put that in as an assumption. There's this product launch. And it leads to an increase in conversion here and an increase in top of funnel here. I mapped this out, all of the assumptions. They map to my, you know, more qualitative plan and list of projects. And I say like, this is contingent on that product launching this period.

And so that way, if you miss the forecast, it's like, well, we had planned to do this here, it wasn't able to happen, you know, not trying to like place blame, but that led to the forecast not being accurate. And so if that happens, you can go back and re forecast and people don't do this. They do the forecast once for a year and then they don't even ever change it.

I think it's useful to say this isn't good. If this doesn't happen this quarter, what happens to annual revenue prior to months later when it didn't happen? Like actually go back and put that in. I mean, I love models. Which is, that's, that's a funny statement. I love financial models to clarify. I love financial models and I like to play with forecasts and I like to know what's possible and what's not.

And if what we're doing is working and I like to connect the dots between what I'm actually doing and that forecast regularly, I think I'm somewhat unique in that as the head of marketing. Cause I do come from more of like the data and growth background in the first like three years of my career, 20 years ago, but I like that stuff.

And. Not everyone's necessarily going to do that, but I think it's a really great way to expectation set cross functionally is to say, Hey, we went back and looked on the forecast based on what we're doing now. Not just going to give you historical data on performance, but we're also looking at the forecast and we're saying, here's what it looks like now.

And so being proactive there can be really useful for just strengthening cross functional relationships and communication. All right. Should we dive into this thing? I can talk for days about planning. And like I said, I've been thinking about this extensively over the past

couple of weeks.

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Ep09 - Marketing Planning & Forecasting with Emily Kramer - Part 1

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