Why B2B Marketing Fails Its Mission (Part 2)

Proving Trustworthiness

As we mentioned in “Why B2B Marketing Fails its Mission (Part 1)”, getting on the short list requires proving to be trustworthy. To accomplish that, a vendor has to pass three critical hurdles.

Hurdle 1: This is a waste of my time.

From the buyer’s perspective, this is a given until proven wrong. B2B Marketing typically wastes a buyer’s time with self-serving information that doesn’t help the buyer.  Now that B2B marketing generally has a bad reputation, it must earn the buyer’s trust by doing the opposite of what it normally does. It must focus all effort on understanding the buyer’s world (perhaps even better than the buyer) to clearly understand the relevant challenges and propose useful solutions.

The first sign that B2B Marketing is beginning to pass this hurdle is found in the first metric:email open rates. If the targeted recipients are opening at a rate of over 10%, then at least the subject line appears to have been relevant to the prospect.

Even after opening the email, the recipient still assumes that this is a waste of her time and looks for the first evidence of this fact so she can move on to something else. Gimmicky subject lines designed only to lure the prospect into opening the email are only going to make things worse.

This happens because B2B Marketers don’t conduct the necessary research to know what message they should be communicating.  They claim that they don’t have time to do proper research.

Instead, they do what’s easy for them and write about what they know—their own company and their own products.

As the result, the buyer gets this message instead of a relevant one: “Vendor ABC is the leading provider of product XYZ…”

It’s a waste of time for both buyer and vendor.

However, it doesn’t have to be.

Hurdle 2: Is this for real?

If the vendor has NOT wasted the buyer’s time and has instead described her challenges in a clear and logical way, the buyer’s curiosity should be piqued—  because where there is smoke, there is fire, right?

On the contrary, her next question is still one of skepticism—is this for real? After all, this point is normally where things start falling apart and turning into the usual self-serving, “Vendor ABC is the leading provider of product XYZ…”

The next step in the buyer’s journey is to turn this cautious curiosity into real interest. This doesn’t happen over one email. It will take several high-quality emails that are consistently on-message to convert curiosity into real interest.

The first sign of real interest is clicking on links that take the buyer to additional relevant information.  However, more important than even click-through rates is increasingly high open rates. As a potential buyer begins to recognize the brand of this relevant information, she continues to open communication from that source, strengthening both her interest and belief that this might actually be a different kind of vendor. That’s how a vendor ends up on the short list of vendors that are invited to present.

Hurdle 3: Should I invite them in?

Some sales executives might say, “We can’t wait to get invited. We must try to get the appointment as soon as possible. Otherwise, our competitors will get in there first”.

Though you shouldn’t necessarily wait until you are invited to contact the buyer, the best time to call is when the potential buyer is already seriously thinking of inviting you. Then it becomes a simple matter of scheduling the date that works.

To pass this hurdle, B2B Marketing must make available to the potential buyer (or someone in the buyer’s  company) a sufficient amount of evidence to prove you are worth the risk of scheduling a meeting.  Sufficient amount means white papers, case studies, blogs, customer interviews, and more that consistently demonstrate the vendor’s commitment to understanding and solving the buyer’s challenge.

B2B Marketing must provide overwhelming evidence that you are a Top Tier Vendor in that segment.

Conclusion

To summarize, the job of B2B Marketing is to get your sales rep onto the short list of vendors that are invited to present to a potential buyer.

In order to achieve this, your Marketing team needs to provide overwhelming evidence that you are a Top Tier Vendor in the buyer’s sector, which is demonstrated by full understanding of the buyer’s problem and the ability to create  a viable solution as evidenced by deeply informative content found on your web pages, white papers, social media properties, case studies, customer testimonials, and more.

While Tier 3 vendors continue to put out “ABC, the leading provider of XYZ…”, you, as a Top Tier Vendor, can work on becoming a go-to-resource for your potential customers, giving you relatively easy access at low cost.

The end result is that you enjoy higher closing ratios and shorter sales cycles, which translate into a high growth rate at low sales and marketing costs— which is what we all want in the end.

Why B2B Marketing Fails its Mission (Part 1)

The mission of B2B Marketing is to get Sales on the short list of vendors that a prospective buyer wants to meet with. That is what happens to Top Tier Vendors—they get invited to present anytime a potential buyer has a need.  

However, the vast majority of B2B companies are Tier 3 vendors—they compete with hundreds, if not thousands of other companies for the same customer base. Tier 3 Vendors never get invited, so they  must spend a great deal of time and money trying to get noticed for a deal they are unlikely to win.

The first step towards building predictable revenue and high growth is to focus on becoming a Top Tier Vendor in a clearly defined market space.

What Tier Vendor are you?

This concept of vendor tier is critical to the goal of achieving high growth rate. Tier 1 and Tier 2 vendors grow at a high rate. Tier 3 vendors either miss their targets or grow at an anemic single digit level.

Tier 1 Vendors

A tier 1 vendor is the market leader in its chosen market space. It has a deep bench when it comes to products, services, and expertise that are a high fit for its customers. As a result, it is the vendor that most customers want to buy from. It also charges a premium to customers for the privilege of buying from the leader.

There are usually no more than 2-3 Tier 1 vendors for any given market.

Tier 2 Vendors

A Tier 2 vendor is a strong niche competitor, but it probably doesn’t have the same scope and scale as a Tier 1 vendor. However, within its limited scope and scale, its offer is as complete and unmatchable as a Tier 1 competitor. In addition, a Tier 2 vendor typically charges less than a Tier 1 vendor.  Therefore, for customers who don’t need the scale of Tier 1, a Tier 2 provider is a very attractive alternative.

There are usually no more than a handful of Tier 2 vendors for any given market.

Tier 3

Any B2B company that is not a Tier 1 or Tier 2 vendor is automatically a Tier 3 vendor—meaning that it is one of many dozens, if not hundreds, of vendors attempting to serve the same customer base with an undifferentiated, “me too” offer. Tier 3 offers are typically seen as “commodity,” and price competition is the only way to win deals.

In this article, we will refer to Tier 1 and Tier 2 vendors as a Top Tier Vendor.

The Real Test of Top Tier Vendor Status

Here is a simple test. If your prospective customers know who you are and what you do, then you are a Top Tier Vendor in your chosen market. On the other hand, if your target customers don’t know you, then you are a Tier 3 vendor as far as that market segment is concerned.

If we have agreed so far, then the mission of B2B Marketing should be to make a B2B company a Top Tier Vendor in its chosen market space.

What we typically see from vendors is an unfocused, highly undifferentiated message that goes something like, “Company ABC, the leading provider of XYZ, has the best…” No one really cares, so that vendor is relegated to Tier 3.  

Here is a question for you, the CEO, to ask yourself:

  • Would you rather be a Tier 3 vendor competing with everyone for anyone’s business and earning hair-thin margins with anemic growth, or
  • Would your rather be a Top Tier Vendor competing with less than a handful of other vendors for the business of a market that knows and respects you and invites you to present your solution, so that you grow at a healthy rate and earn healthy margins?

The Power of the Short List

From the vendor’s perspective, getting on the short list of a buyer confers two very important advantages:

  • Since the list of competitors is short, the probability of a win is much higher, resulting in more predictable revenue and higher growth rate.
  • Since the list is short, buyer-vendor engagement level is high. Reps can more accurately gauge their chance of winning and can exit early if they don’t see a win. This further reduces wasted sales resources, which reduces cost of sales.

However, from the buyer’s perspective, getting on the short list depends on whether you as a vendor are trustworthy or not.  Can the buyer trust you to not to waste her time? To be honest with what you can and cannot do? And most importantly, is trusting you going to cost the buyer her reputation, or even her career?

If you are a Tier 3 vendor, the answer is simple. You are not trustworthy, and the only thing that would make up for the risk of working with you is rock-bottom prices.

However, if you are Top Tier Vendor, you have proven to be trustworthy, and you are invited in to present.

The purpose of  B2B Marketing is to make your company a Top Tier vendor so that you can get on the short list.

From there, you just have to prove to be the best fit for the opportunity— and that’s Sales’ job.

Read about the three hurdles in proving trustworthiness.



Five Factors Affecting Revenue Growth (Factor 5): Manage by Metrics

In his book “The End of Marketing as We Know It”, Sergio Zyman, then Chief Marketing Officer of Coca Cola, spells out his success in driving Coca Cola to the number one beverage company in the world. At a time before cloud based services, Sergio tracked numbers daily. He would run an ad and then measure how many cases of Coca Cola products that ad moved. If it met his metrics, the ad continued to run. If it didn’t, it was cut.

Among B2C companies, Zyman is not alone in his obsession with running Marketing by the numbers. Jim Kiltz, ex CEO of the Gillett Company and author of “Doing What Matters,” also ran his company by the numbers. In fact, he advocated for the ZOG (Zero Overhead Growth) and NOG (Negative Overhead Growth) principles that basically said companies should grow their sales with no change in selling and marketing costs—a far cry from the current situation of B2B companies.

We have not been able to find any examples of B2B companies that strictly run Marketing by the numbers. Yes, nearly all B2B companies measure and track sales results, but that’s about it.

Even in Sales, most of what is tracked is at the tail end in closed wins. Few companies, if any, track sales cycles, closing ratios, average deal sizes, lost deals, etc., by rep. Even fewer track how early reps cut loose opportunities that go nowhere.

Managing by Metrics is how companies move from Good to Great. It requires substantial work, but it pays a lot of dividends in the long run.

In Conclusion

It is our belief that each of these Five Factors can significantly improve a company’s ability to grow Sales. Working on all five can completely revitalize a company that is seeing flat sales.

Our recommendation is to always start with Factor 1. Nail that, and the others will be much easier to accomplish.

Please contact us with any questions or thoughts. We are here to help.



Five Factors Affecting Revenue Growth (Factor 4): Intelligent Data

Salespeople often complain about the amount of data they are given and ask when and how they are supposed to use this data.

Overloading people with data can be just as useless as giving them none. Not only does it waste time, it also it focuses their work on the data rather than what the data was supposed to enable—getting more business.

By intelligent data, we mean data that enables a sales rep to be more relevant and useful to a prospect so that the prospect wants to do business with the sales rep.

It should therefore be designed thoughtfully and purposefully, rather than simply transferring all of  Marketing’s material to Sales.

Intelligent Data must always be focused on the target market, and nothing outside of that. With a new prospect, it should provide a sales rep with sufficient insight on what the prospect is interested in as evidenced by marketing activities (emails clicked/forwarded, pages visited, content downloaded, etc.). Therefore, no prospect should be sent to Sales without having accumulated sufficient score as a result of significant marketing activity.

As we have shown in the Four Quadrants, existing customers are a great source of new revenue. Therefore, Intelligent Data should incorporate their past sales patterns—what they bought, how much, and when.

Intelligent Data is created when the right information from a number of tools (Marketing Automation, Sales Automation, and Accounting Automation) are integrated into a complete picture. However, it is very important that the picture has just enough details and no more. Overwhelming sales reps with more data than they can digest only makes them want to ignore the data. Read about the fifth factor here.

Five Factors Affecting Revenue Growth (Factor 3): Sales and Marketing – A Single Continuum

By now, factor 1 and factor 2 should have demonstrated the central role of marketing in the new B2B paradigm. Marketing is too important and too expensive to just “have” if it doesn’t impact sales in a measurable way. For Marketing to impact sales in a measurable way, it must be numerically aligned with Sales.

It is no exaggeration to say that a least 75% of all sales should come from leads generated by Marketing.

We cover this topic extensively in The Four Funnels Framework, which shows that all revenues start in Marketing and end in Sales.  However, the planning starts from Sales. Whatever the revenue targets are, the numbers must be worked backwards to determine how many inbound and outbound leads will be required.

In the past, the relationship between Marketing and Sales was akin to two neighbors who know each other, try to accommodate each other, and occasionally complain about the other’s lack of fairness or reasonableness.

Today, however, the relationship between Marketing and Sales is more like one of a  married couple working closely together to raise a family.

Each is equally responsible for achieving the overall revenue goals. Read about Factor 4 – how intelligent data drives revenue growth.

Fives Factors Affecting Revenue Growth (Factor 2): Sales Process is Buyer Process

Factor 2: Sales Process is Buyer Process

Research by McKinsey & Company, Bain & Company, and the sales force training firm The Rain Group all show the same thing: Buyers now prefer to work with sellers who align their process to the Buyer’s process. A seller that does not comply is one that complains about unreturned phone calls and emails—hence increased marketing and sales cost.

The New Buying Process

The studies show  that Buyers prefer to conduct their own research and determine who gets invited to work with them to further refine a possible solution.

The buying process starts internally, typically when some pain becomes no longer acceptable, driving a new initiative to address it. The head of the business or functional unit (the business driver) who is responsible for the resolution of the issue now heads this new initiative. She typically assigns someone on her team to conduct preliminary research and report to her with findings and recommendations.

This is the beginning of the “Buying” process. At this point, no seller is aware that the buying process has started.

The team member assigned to this task now begins the research by entering keywords in her preferred  search engine. She thenreviews the search results and begins tagging the promising ones.

Later, she will go deeper into each result to determine  which will make her final cut. At no point has she called any company—this is all digital content review.

A few days later, she returns to her boss to report and make her recommendations. The business driver then makes the decision of who they will review—in other words, who makes the short list. She then tells her researcher to contact the short list and schedule meetings with the vendors’ representatives.

The New Selling Process

Marketing

Since the buying process starts with research, the first thing that a Seller must do is make sure the seller’s website has deep and relevant content that addresses the issues that its market typically faces.

If the Seller has a focused market as described in Factor 1 above, then not only can it stay abreast with changes in its chosen market, but it can actually be ahead of them with thought leadership. The Seller can anticipate trajectories in regulations, changes in norms, shortages of key supplies, etc.

Because it specifically focuses on a single market and because it has depth, the Seller’s content will surface  among the many sources examined by the Buyer’s researcher. The Seller’s chances of making the short list is pretty high, and it will likely be invited to present.

Lead Generation

In addition to having highly search optimized content that drives inbound leads, if the seller also has outbound lead generation campaigns, then it is virtually guaranteed to make the short list of vendors that get invited. Its emails are likely to be opened as their message is directly relevant and always refreshing its subject matter. Its voicemails are right on and are likely to generate call-backs.

Selling

When invited to meet the business driver, the Seller must recognize that this is a collaborative event and should invite the buyer to fully participate in defining the problem as well as the solution. Read about Factor 3: Sales and Marketing.

This is exactly what buyers today are looking for since their needs are complex and will need customized solutions rather than ready-made ones. . They want Sellers who are willing to work towards customizing a solution that functions perfectly for them.

The Problem with the Old Selling Process

Lets compare the new selling process with the old. The Old Selling process consists of  “blasting” a huge list with irrelevant emails and “dialing for dollars” in hopes that someone picks up. If through sheer persistence, the sales rep gets an appointment, the chances it will get canceled are high.

And if the rep actually gets the meeting, the rep typically will blow it off by forcing a process the buyer does not find useful—first I am going to tell you about me. Then I am going to ask you about you. Then I will show you my product. Then I will send you my proposal…

The old seller driven and seller biased way no longer works. Sellers must understand that Buyers are looking for committed partners.

Five Factors Affecting Revenue Growth (Factor 1): Market Focus

Factor 1: Market Focus

Of all Five Factors, this one probably drives high growth more than any other.

Geoffrey Moore defines a B2B market segment as the intersection of industry, role in that industry, and geography— for example, hospital administrators in the US. Evidence suggests that the tighter the definition of a market segment, the greater the performance of a Seller in that segment.

Therefore, if all other factors are  equal, a company that sells to “Hospital Administrators in the US” will see higher growth rate and profitability than one that sells to “Health Care Professionals in the US”. To expand upon this example, a company that sells to “Hospital Administrators In California” will see the fastest growth.

What usually happens, however, is that Sellers keep widening their definition of the market they serve thinking that they will get more business by doing so. The reality is often the opposite. To demonstrate this principle, we will need to analyze these three different markets.

Let’s assume that XYZ Corp is a $100 million provider of software products for the healthcare industry.

The question is where it would realize faster growth and profitability: Hospital Administrators in CA, Hospital Administrators in the US, or Health Care Professionals in US.

Segment

A. Hospital Administrators in California

B. Hospital Administrators in US

C. Health Care Professionals in US

Estimated number

400

2,200

128,000

Key competitors

4-6

70-120

200 – 300

Message

Managing value-based reimbursement

Managing value-based reimbursement

Regulations in healthcare

Conferences

3

17

211

The prospect of selling to 128,000 Health Care Professionals in North America instead of only 400 Hospital Administrators may seem more appealing. However, what really matters is the perspective of the buyer.  Does XYZ offer the best value?

Imagine how XYZ Corp will have to demonstrate such evidence of value to 128,000 Health Care Professionals in the US.

First, it has to reach them in some way. You can imagine what it takes to reach such a widely diverse audience. Does it attend 211 conferences? Does it run TV or Print Ads? Does it try to buy email lists? What would be the subject line? What would its compelling message be for a wide assortment of professionals including Doctors and Nurses, Therapists, and Hospital Administrators? How would it organize its sales force—  by geography or by profession?

Whichever road it takes, XYZ Corp’s choices remain the same—either go shallow and wide, or spend an enormous amount of money to build the necessary expertise in each of these professions.

When faced with that choice, most companies seem to choose the wide and shallow route, rather than scaling back to go narrow and deep in a vertical strategy. Unfortunately, companies that go shallow and wide are always beaten by those that go narrow and deep—hence the cost of sales and marketing rising faster than revenues.

In reality, there is a third choice—one that is actually better than either of the above. That choice  is to go narrow and deep in only one segment at a time.

For example, if XYZ Corp decides to go narrow and deep with a focus on Hospital Administrators in California, it will face a totally different scenario. It can now direct its product, messaging, and services to just that market. It only has to compete with 4 to 6 other providers, and if it chooses to attend conferences, it only needs to attend the top 3. Both are doable tasks.

Finally, its sales reps only have to work with Hospital Administrators in CA, so it is perfectly feasible to have sales reps who are experts on the issues that their customers face.

In which segment would you say that XYZ Corp has a better chance of closing more deals faster and at better prices: segment A, B, or C?

It is worth repeating that Focus is the most important of all the Factors Driving Revenue Growth.

Read about the second factor driving revenue growth here.

Decision Point: Build or Buy?

As you can see, there is a lot that goes into building and maintaining the operational excellence necessary for generating consistent revenue growth. Not only does a company need to produce high quality and compelling content regularly, but it must also continually distribute this content to its targeted audience, track engagement, make necessary adjustments, and pass those that are ready to the next operations team.

A common mistake that many companies make is to think that they can hire one or two people who will take on the various roles shown in the chart to the right. It doesn’t seem to work out that way, no matter how hard the marketing team tries to learn and master these various disciplines.

 

Position

Salary/yr.  

Marketing Head

$108,000

Researcher

$45,000

Copywriter

$84,000

Graphic Designer

$84,000

Video/animation

$84,000

Social Media

$60,000

Email marketer

$60,000

SEO specialist

$60,000

Prospecting Head

$84,000

BDR

$55,000

Sales Support

$45,000

 

A better alternative is to keep your marketing team lean with just the Head of Marketing, who is responsible for developing your marketing strategy, and a smart, energetic product marketing manager who will work with sales to develop product marketing campaigns.

With your internal team controlling your marketing and sales goals, strategies, and metrics, you can now work with a partner to provide you with both the Marketing Operations and Prospecting Operations deliverables you need.

This approach gives you the following benefits:

Focus. You focus all hiring where it matters the most—on those that are integral to the design and development of your products and services.

Rent-to-own. You let others make the required investments toward achieving the operational excellence that is necessary to deliver the quality and quantity of results that you need to consistently grow your revenues.

It is the classic case of paying for what you use, rather than for the infrastructure needed to deliver what you use.

 

About SOMAmetrics

SOMAmetrics is a sales productivity enhancement consulting company that enables clients to consistently grow their revenues by fixing three critical sales hurdles—insufficient sales pipeline, low conversion rates, and access to new markets.

We provide the best practices, new market research, SEO, digital marketing, sales enablement, performance metrics, and sales and marketing automation services that clients need to consistently achieve their revenue objectives.

Our best practices, systems, and processes have been honed through working with over 100 small and mid-sized B2B companies serving a wide range of industries including: Financial Services, Education, Healthcare, Manufacturing, and Data Centers.  Please contact us today:

Phone

510 206 9264

Email

eskinder@somametrics.com

Website

www.somametrics.com


Critical Success Factor 4: List Management

In Critical Success Factors 1-3, we discussed the importance of Content, Content Distribution, and Automation in the operation of B2B Sales. Here, we discuss the final factor, List Management.

Characteristics

Importance/Impact

Duplicate records

Duplicate records are inevitable as you continually build your marketing list. However, they pose a significant problem and must be continually managed. At any given time, you should strive to keep your duplicate records at under 1%.

Duplicates happen when your marketing team uses different sources of lead acquisition and enters leads into your database without first checking for duplicates. Sometimes marketing does this in order to keep a prospect in multiple marketing lists. However, there are ways to do that without creating duplicate records.

Opt outs

A key aspect of managing lists is ensuring that someone who opted out of one of your marketing programs is opted out of all, unless the recipient chose to opt out of specific marketing programs.

You should treat opt-outs very seriously. If you receive even a handful of spam complaints, you could become blacklisted, which means you would not even be able to send emails internally to each other until you clear yourself from the blacklist.

Bounces

Email bounces occur when mail can’t be delivered—this can be because the person is no longer at the company; she created a false email address just to get something she wanted; or because she created a temporary email for such a purpose, and it is no longer active.

You must keep your lists clean on a regular basis as bad records give you an inflated representation of your actual audience size. Too many bounces can also cause you to be flagged for blacklisting.

Email validation

If your sales reps bring a list of prospects with emails and claim that these prospects wish to receive marketing emails, they should first be validated before being placed in your system. There are online email validation tools that start at $14/1,000 records, and the prices drop for larger list sizes.

List segmentation

This is perhaps the hardest part of list management—keeping a tight control of the audience so you can send highly targeted messages. For example, you want Jim Jones to be part of your overall monthly newsletter, but you also want to keep him on your Hospital CIO list and your overall CIO lists. What you don’t want are three records of Jim Jones—you just want Jim Jones to be in all three marketing campaigns.

As you can see, a lot of work goes into creating engaged marketing audiences that are more inclined to meet with your sales reps, thereby providing you with a consistently high quality and quantity of sales pipeline. You may need help with some of this work. The next section covers that.