Why B2B Marketing Fails its Mission (Part 1)

Man writing about B2B marketing

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.



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.

Manage by Metrics

Manage by Metric graph

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.

Use Intelligent Sales Data to Grow Sales

hand with pen pointing to graph that shows sales growth

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.