How to Keep the Marketing Engine Running with Paul Sparrow of Chief Outsiders

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Alex Membrillo: What’s going on everybody? Good morning, good evening. Goodnight. Good afternoon. Happy gardening, walking. Whatever you’re doing and listening to my voice. I’m sorry you have to listen to me, but I’m happy to introduce Paul Sparrow. This guy is an area managing partner, CMO of Chief Outsiders. He’s going to tell us all about it. Why am excited about having Paul? Not only does he come with a ton of high-level healthcare marketing experience and that he was SVP of marketing for things like WebMD, little site we all used, but he’s now running a fractional marketing department for Chief Outsiders.

He gets to come in, fix all the stuff that we mess up, build the right foundation, and teach us what are the things he looks at greatest obstacles, things he likes to put in place, et cetera. This is going to be a little change of pace because we’re usually talking to the insiders. Now we’re going to talk to the chief outsider. Paul, welcome to a [inaudible 00:01:10]. Where do you hail from? Where do we get to see a beautiful mug from?

Paul Sparrow: [laughs] Good afternoon, Alex. I live in God’s country, my friend. I live in Charleston, South Carolina.

Alex: God’s country. I love it. Guys, if y’all [inaudible 00:01:25], my wife’s parents have never been to Charleston, lived in Atlanta for 30 years, and that is so wild to me. Charleston’s one of the best cities in the country for something historically preserved. Beautiful and the best food you’ll find in the South, and I’ve been to Savannah. It is top-notch. Paul, tell us a little bit about your history and how you got to Chief Outsiders, and what you do at Chief Outsiders.

Paul: Sure, you bet. 25 years in sales and marketing, primarily healthcare and SaaS technology within healthcare. I’ve got a really cool background. Man, I’m blessed. I spent 10 years at a Fortune 50, at Johnson & Johnson. I’ve done a couple of startups. I’ve done a lot of emerging growth organizations and I’ve been through a dozen mergers and acquisitions. I’ve worn a lot of hats in doing that.

Joined Chief Outsiders eight years ago, started out as a CMO, and eventually became a partner. Today, I’m on the management team and I am an area managing partner here in the south.

Alex: I love that you’ve been through M&A because a lot of our clients and the people that listen to this are constantly doing M&A. They’re either getting acquired or they’re rolling and tuck-ins, so you can talk all about the marketing stuff that has to go in there as well as the cultural bonding. All right, chief outsider, so your role, you’re an area partner. Now, tell us about the typical client and the obstacles you brought in. What are you brought in to do and the obstacles you initially generally see when you first land? What are the things you first tackle?

Paul: It depends. All right. The reason we are brought in is because that organization is feeling some pain, typically has to do with the pain of growing their business. Their revenue engine is broken, their marketing engine is broken, their sales engine and marketing engines don’t play well together. They’re essentially trying to cross the chasm and they don’t know how. Maybe they’re entering a new marketplace, launching a new product or service.

All of those scenarios, there’s either a CEO who’s feeling pain or he or she is having nightmares and wants to avoid the pain because they see things coming down the road and they know they need help. We do a lot of business in healthcare, but in full disclosure, we’ve worked in 70 different industries for almost 1,600 CEOs since 2009. Very deep and diverse bench of growth experts.

Alex: What happens? Is the CMO generally in place? No. Right. Or is a marketing director, they have no one in marketing. What is the general– When do you call Paul? When do you know that’s Paul?

Paul: We focus on the lower mid-market. It’s funny how people classify the business world. One guy’s lower mid-market is another’s enterprise company, but if you think of small mid-size businesses not so much the scrappy startups, those are the types of companies that we work with. They’re trying to grow their business. They want to get to the next level.

Alex: What is the first thing you see? You said the marketing engine is broken. When you’re meeting with that CEO, what do you say the– Usually the most important thing you’re going to tackle to start is what?

Paul: Well, that’s a great question, Alex. I need to understand what they want to be when they grow up. What are their goals? What I don’t ask them is, “What’s your five-year plan? What’s your 10-year plan?” I say, “What’s your vision for the company?” Because some people, their vision is, “Look I want a lifestyle company, but I need to get it to be more profitable.”

Other people’s vision is, “Hey, we want to get to the point where we can bring in private equity investors and others that we want to go public.” It varies but the first thing is, “What’s your vision? What do you want to do for the company? Please share that with me.” Then my next question is, “What’s in the way? What are the obstacles between here and there?” That’s when we start really peeling the onion back and getting real.

That’s when I find out what pain they’re experiencing. If it’s the marketing engine, they start describing, “We spend a lot of money on marketing and we know half of it’s working. We just don’t know which half.” That’s probably a broken marketing engine. Or some suppliers that aren’t doing their job, they’re not metric focused, they’re not tracking, they don’t have KPIs in place. They’re not telling that business owner, “Here’s what you’re spending on this tactic and this is what’s happening and we need to make adjustments based on what the metrics are telling us.”

Alex: You start with the vision for the company. I think too often marketing directors who, the majority of the people listening to this, we just launch into patient acquisition, we’re going to drive more revenue, but we don’t actually, what kind of revenue? What are the service lines markets? What’s important to the business? Where does the business want to go? I think the more that we align with the business, it’s not easy to do.

It takes experience to translate it. Starting with a business objective is what your boss wants you to do.

Paul: Then to start figuring out what parts of the engine need to be fixed to get there. The biggest mistake that people make is they get tactical first. If you break down a growth plan, there’s three phases to an effective growth plan. There’s insights, that’s data. We utilize data to understand where the gaps are, where the opportunities are, where the threats are. That’s internal data and market-facing data. That’s the first.

Then there’s the strategy. The strategy gets built based on what the data tells you, and then what supports the strategy is the execution phase and that requires tactics. What most business owners in the small mid-size world end up doing is they get tactical.

Alex: It’s right.

Paul: They go, “Come on man, we’ve been doing this for 10 years. We know our data, we know our marketplace. I’ve been doing this, and I’m the CEO of this company. We need more sales, so let’s get more salespeople.” I throw a bunch of salespeople out there and that’s where you throw your money away, my friend. When you get tactical, you throw your money away. Be insights-focused. Be strategic and then build the engine that supports it.

That’s where the tactics come in and measure everything. I’ll say this, I know you want to ask me another question, but I got to say this, this is really important. To the business owners that are out there, if you’re conducting marketing tactics and whoever is doing it, someone on your staff, an agency that’s supporting you, and you’re paying a monthly retainer, whatever it may be, if they can’t tell you definitively what the ROI for their tactics are, grab your wallet, kick them out the door and run for your life. Because marketing can be measured.

There’s this strange mystique out there that it mostly comes from creative agencies that say, “Oh, you need to have a marketing mix and you can’t measure everything.” We do know that if you have the right color logo and all this stuff wrong, you can measure everything with an ROI-based lens and you should.

Alex: You should. Do you look at some of the more upper funnel type stuff that you think of, social advertising, display, video, OTT, all that fun stuff. Do you try to track that all the way down to ROI? Are you okay with just some leading KPIs there like impressions reached or you say, “Guys, no if we can’t prove it, this business is too small.”

Paul: It’s important that you understand the tale of each tactic. You need to know, “What’s the bottom line? Why are you spending money on this stuff?” Because you want more revenue, you want higher profitability. That’s why you often have a breakdown in small, mid-size businesses where the sales guys are pointing at the marketing guys are going, “If you just would get us some qualified leads, we could sell more.” The marketing guys are pointing at the sales guys going, “If you guys could convert these leads we’re sending you, we’d all be making money.”

Marketing and sales should coalesce. They should work well together. The ROI that you track is going to tell you just how healthy that organization is.

Alex: Let’s get back to insights based. You’re not doing this every time, but a lot of times. Are you bringing in market research firms that are going to view the clients, the providers, their colleagues, and come up with a brand positioning? How do you get to insights?

Paul: Well look, the key is to spend your clients’ money wisely. You could create this Cadillac of insight gathering and spend a whole lot of money that you don’t necessarily need to spend. Small, mid-size businesses, they don’t have a lot of money to spend, so they’re trying to be as efficient as possible. I have personally conducted thumbnail research for my clients not hiring a research agency to do it. Look, I can call your loss prospects as an objective firm. Paul Sparrow as Chief Outsiders. I understand you recently considered Alex Incorporated and you decided not to buy from them. If you don’t mind, I’d like to ask you a few questions. I can get everything that we possibly think to find out why we didn’t convert certain types of prospects. I can also find out what your clients love and hate about you, which they rarely tell you what they hate about you unless they’re beating on you about price.

Alex: Yes, because you’re coming as an objective third party, you can do it yourself. Guys, you may not also need a market research. You go with someone like Paul, he can handle that for you because he’s not coming in with a bias.

Paul: It depends on what you’re trying to understand. Sometimes, you do need a research firm. It just depends on what you’re trying to tackle but our approach is, really, look, we don’t need everything down to the atoms and quarks and molecules and so forth, we just need to have a very good sense of what’s going on. The good, the bad, and the ugly. A lot of that, you can get from existing data in the company. Not all companies are data-centric but most companies have data. They just haven’t utilized it properly.

The first thing that we do in an engagement is even before the kickoff call, we send a list of data requests, internal and external data requests. No client ever has it all and they all feel sheepish about it but they shouldn’t. What they have is the starting data. Then we go, “Okay, we have gaps here. Let’s figure out how we can fill in the gaps and get the information we need without spending a bunch of coin.”

Alex: I like that thumbnail. There’s ways to get to the point without spending a ton. Talk to us about fractional CMO. A lot of people were thinking, “How do I integrate Paul with the rest of my team? How long does he stay on? Can he hire people underneath him? What are the typical engagements?” Give us a couple of examples of when it fits best, when to call you, or look for a fractional? Some people are looking for fractional CEOS right now, CIOs. What’s the typical engagement look like?

Paul: Three different ways that you can hire Chief Outsiders. One is advisory. That’s what it sounds like. Coaching, mentoring, giving advice. There are no deliverables. Just coaching you along the way. The second is project-based. That’s really when a component of the marketing engine needs repair. For example, the digital engine isn’t working as efficiently as it should and projects are typically in maybe 6 to 12 weeks, depending on the complexity of the project.

Fractional is where they really need to move the engine forward. Fractional engagements, the average engagement utilizes about 25% to 30% of a CMO’s time and lasts about six months. Can be longer, can be shorter, can be more time, can be less, but on average, that is fairly consistent. We figure that out of the discovery process, scope that out before anybody ever signs a statement of work.

In a fractional engagement, which is how we are hired most often, the sky’s the limit. Sometimes the organization has existing resources. and then we’ll oversee those resources.

Sometimes they have a Director of Marketing who doesn’t know how to think like a CMO and we teach them how to think like a CMO. We teach them how to execute like a CMO. Sometimes they need external resources that they haven’t hired before or what they’re using isn’t doing a good job so we’ll help them make the right decision. Again, back to the whole idea is that that engine gets built and can be executed.

You and I have chatted before, Alex. You’ve probably heard me use the analogy of we fly the plane and we repair it at the same time, but before we parachute out of the plane, we make sure that you know how to fly your plane and that we have all those controls in the cockpit that tell you what the marketing tactics are doing. When the deal goes this way, what do you do? When the deal goes that way, what do you do?

Alex: That’s pretty cool that if someone has a younger marketing director, it’s a good time to bring Paul in and you’ll teach her how to think like a CMO report, think strategically, do tuck-ins, prepare for M&A. You don’t have to hire a CMO necessarily full time and then you’re parachuting out in about six months and that marketing director now will love everything you taught her and that company taught her.

That’s cool. We employ that here at Cardinal for [unintelligible 00:14:43] stuff. You have 70 Something different industries. Do you find yourself predominantly in healthcare, healthcare B2B, healthcare B2C? Do you have partners that specialize? Do you say like, “The vertical that we have history in is less important than it just being marketing and you can help if it’s B2B, B2C tech to healthcare? Does it matter? Do you think it matters or marketing is marketing?

Paul: No, it matters. We do business, you name it. I’ve never talked to a prospect where I didn’t have someone who had experience in that vertical, so we do. We do more B2B than B2C but we have a number of B2C experts, technology, financial services, healthcare galore. We check all those boxes. The important thing, when it comes to a marketing expertise, when it comes to marketing resources, as a small midsize business, you don’t want to spend 90 days teaching your fractional CMO about your business.

A healthcare company with a SaaS platform. Look, I’ve got some of the best CPG marketers in the world. They’re awesome and they’re smart enough to learn healthcare in a SaaS platform in 90 days, why would I do that to you? You’re spending money to teach your fractional resource your business. No, I’m going to present to you a CMO candidate who comes from the healthcare world, who has been in the SaaS world, who knows all the ins and outs, and can leverage those skills to get out of the blocks really quickly on behalf of our clients. That’s really important to us. It’s marketing discipline.

Alex: Industry matters, baby. When you’re looking at marketing for this upcoming year, what are you excited about? What are you nervous about? Do you think TikTok is going to start taking over? ChatGPT gets rid of Google, eliminates Google’s need like that. What do you see? More the same?

Paul: The vehicles don’t concern me. What concerns me is what concerns clients and prospects. The biggest concern of most people’s play right now is what’s going on with the economy. The US economy and the global economy is not heading in a good direction. Inflation is pounding away and the fed is making some bad decisions about how to impact that. That’s having an impact on everybody.

The big question is, how do I grow my business in the midst of economic challenges? I happen to know quite a bit about that and actually run a workshop for my clients and for SEO groups on how to do that.

Alex: Tell us more. How do they find that? What is it? Is it a workshop done online or we got to come to Charleston? Don’t twist my toes.

Paul: No, I’ll get on the plane and fly to you. Essentially, what I teach them is using their company’s data revenue. There are two data sets. One is a lagging indicator and one is a leading indicator. The lagging indicator tells you what economic phase your business is in today. Your business is in one of four phases. You’re either in a recession, you’re emerging from a recession and going into emerging growth, you’re in accelerated growth, or you’re in decelerating growth heading towards a recession. You’re in one of those four.

The lagging indicator will tell you exactly what phase you’re currently in. Then the leading indicator tells you what direction you’re moving towards. When you have those two data sets, they’re easy. You can literally put about three to five years’ worth of data together. It’ll take you about 30 minutes to an hour to plug it all together and then every month, you just roll in the new data set and it’s golden. It tells you exactly what direction you’re going in and helps you understand when to invest and when to tighten the belt.

When I talk about this, conceptually, most business owners, “I know what business phase I’m in.” “All right, for a steak dinner, let’s shake. You put the data together and I’m going to shake you don’t know what business phase you’re in.” I, more often than not, win that bet.

Alex: This conversation’s got me wondering if I know my market, my clients, my colleagues, and what phase of business I’m in. It’s interesting, Paul, you said, “I don’t care about the vehicles, I’m more interested in the market.” Let’s talk about it. The economy used to feel a little more insulated here in the southeast, in God’s country, but still, we’re heading for a serious boo-boo here later this year. What are you telling your clients to do with marketing?

You have to be really ROI-centric. This is not the time for exploration, creative testing. This is the time to do more of what works. Do you even know what work? When you come out of it, you’re going to tell them and advise them on how to market during a recession. What are you telling them?

Paul: The most important thing is understanding where you are and what direction you’re going in. If your business is in a growth mode, that’s time to invest, okay? That’s not the time to tighten the belt. If you’re receding, well, that’s the time to tighten things up a little bit. If your business is in a slowing growth mode. Not in a recession but in a slowing growth mode. Not in a business recession. There are different strategies that you can put into play. For example, attrition. Don’t fill vacant jobs. When people leave, tighten the belt and don’t do that. If you find yourself in a recession, yet you definitely– If you’re a manufacturing company, you don’t want to pay overtime, never pay overtime when your business is in a recession. People say, “Wait, what do you mean we have to work around the clock.” Don’t pay overtime. It’s time and a half. Tighten the belt. There’s a time to invest in aggressive marketing and there’s a time to be judicious about what you invest in marketing.

Alex: It’s like a little irrespective of the economy, you’re looking at the business phase. We’re in slowing growth. We grew like crazy last few years and now we’re trying to catch up to slowing growth, it sounds like. Give me the secret sauce. Slowing growth means you can continue to invest, but probably invest a lot less than the crazy one we’re in hyper growth mode, but don’t conserve right now because we have some good momentum, right?

Paul: Yes. Slowing growth is never a time to launch into new markets that you’ve never done business in before. That’s an uncharted territory. It can be risky that need a lot more information. In general, it can be risky to launch new products and services unless you’re in a marketplace, you’ve got the research. You know that the uptake will be good, that it’s a force multiplier type of offering into the marketplace. You have to be smart about your strategic moves depending on what growth phase you’re in.

Alex: That’s a great game of business. That’s why we love it. That’s why we wake up invigorated every morning. Not only are we in business, but we’re in marketing, which is like, job security. Paul, final words for marketers, for CEOs out there that you want them to know this year, this crazy year. Hey, listen, if there’s one thing left, you want marketers or CEOs to know that you usually encounter and you say, “Oh my God, please stop doing this. This is not the time for that.” Is there anything that comes to mind, the most major hiccup that you come across?

Paul: Yes, I would say stop making emotional decisions. [crosstalk] You should make decisions based on facts, insights, data, “Oh, come on, Paul. I’ve been run this business 10 years. I know my business. I know my customers. I know my marketplace. The economy is a little crazy, but know what we–.” No you don’t know. You may be brilliant and you and your instincts may be wonderful, but there are only a handful of idiot savants out there.

Data helps. Information is critical and take the time to digest it and understand what it’s saying to you because a smart business owner becomes brilliant when they have the right data sets in front of them. You can’t lose.

Alex: I feel bad. I make every decision emotionally here. I don’t know, if we’ve got salesforce looking at the numbers, but now I’m like, “I don’t know how that lead really came in. Let’s increase everything.” Guys, y’all heard it from Paul. Look at the data, everything ROI, it’s got to be tracked all the way down. It’s fine to do upper funnel stuff. It’s fine to explore. This is not the year for screwing around. Everything tracked.

If your agency can’t do it, your internal team can’t do it, throw them out. Call Paul and he’s going to come in and measure to the business objective and vision. Start going right to tactics, understand what the vision is, and start running your marketing department like it’s a business, like it needs a business result. That’s what your partners want to see you do. Paul, how do they find you? What’s the best way? I know you’re on LinkedIn. I know you’re a Chief Outsider. How do you prefer people come across you?

Paul: I’m easily reached on email. Psparrow. Like the bird S-P-A-R-R-O-W [email protected]. You can send me a text or you can give me a phone call.

Alex: Really, God, that’s crazy. From one cardinal to a sparrow. We are just one flew south from you so I appreciate this conversation. Paul, this is really fun, guys. Paul has been really generous with me even outside of this conversation. He will advise you. He just wants your business to improve. He’s super rich and semi-retired, so he doesn’t need the money. He doesn’t need engagement out of everything.

He wants to give advice on how you should run your business. Go reach out to him. Paul Sparrow, Chief Outsiders. You’ll find him on LinkedIn or through their website. Paul, thank you for joining us on Ignite.

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