Managing by Metrics

Manage by Metric graph

Importance of Managing 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 by managing by metrics. 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.

Align Sales and Marketing for High Growth

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.

SOMAmetrics Four Funnels Framework

 

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.

Download the white paper that shows you how to tightly align Sales and Marketing for High Growth

Removing Sales Friction in B2B Sales

Group of friendly business men and women shaking hands with no friction

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.

Download the white paper that shows you how to improve your sales operations better

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.

Critical Success Factor 1: Quality Content

person on laptop displaying the words content

One critical success factor in the operations of B2B sales is quality content. Content is how a prospect can determine the degree to which a vendor understands her problem and can solve it. The more quality content you have, the more certain she becomes that you must be on her short list of vendors to evaluate— making it easy for your sales reps to meet with her.

Since this is a journey for the prospect to take, you must have a variety of content types designed to get her started on this journey so that she can acquire more knowledge and conviction regarding your company and continue to an actual sales engagement with one of your sales reps.

TypePurposeUsage
EmailsCreate awarenessEmail continues to be the most effective outbound communication medium. Its sole purpose is to make the prospect aware of a specific problem and what the logical next step might be towards solving that problem.  Ask the reader to take a small incremental step forward, but always have a complete means by which the prospect can get in touch with you if she is ready to engage.
White PapersEducate: the generic problem and solution.The purpose of a white paper is to enable your prospects to clearly see the type and extent of the problem(s) they have, analyze its cause(s), and provide a vendor-agnostic solution to the problem. In other words, your objective is not to sell your product or service, but to establish yourself as a credible partner that can help your prospect solve their problem(s).
WebinarsEducate: specifically about your solutionWebinars are similar in purpose to White Papers. They both require a significant amount of time and effort to produce quality content. However, webinars are typically expected to discuss your product and solution, perhaps with a demo (if appropriate).
Case StudiesProveCase studies give the prospect a practical and relatable example of how your solution solves problems such as the one the prospect is currently experiencing. The power of a case study can be diminished if you are unable to use the customer’s name (especially if it is a highly recognized company). Be sure to do what it takes to get permission to mention the client by name on at least a few of your case studies.
BlogsEducate InterestBlogs are relatively short (1-2 pages), highly targeted, and highly educated opinions. Have your internal experts write them, and then have them polished off by your editor.
Video / AnimationArouse curiosityThese are short (60-90 second) video clips that explain the main issue and the solution. The goal is to create a fun and engaging way to communicate information at a high level.
Product InformationEducateThis is where you get to talk all you want about your products and services. It is best to keep the information simple, factual, and engaging.

Read about the second Critical Success Factor, “Content Distribution”.

Critical Success Factor 2: Content Distribution

chalk boarding drawing of content on being being distributed from one to another

While the first critical success factor in B2B sales involves the quality of your content, the ways in which that content is distributed to your audience is also important. Here are some key things to note regarding content distribution:

MediumKey MetricsDescription
EmailClick through rate, unique opensThe purpose of email is to produce awareness of something you want the recipient to notice. You want to point out a critical issue and direct recipients to where they can learn more about it.

Therefore, your email campaign must be designed to support your prospects’ desired process for finding solutions to their problems, as well as the vendors with which they want to partner.

Emails must be designed to get a click to where you can engage the prospect more. Of course, emails must be opened in order to get the click, but the opens alone tell you very little.

WebsiteInbound leads, search ranking, web trafficYour website’s number one role is to act as the central repository for the information your prospects need to determine that you should be on their short list of vendors they should engage to solve a particular set of their problems.

It is a powerful communication and content distribution tool and must be used as such. You must rely on your website to bring in leads straight to your sales team, as well as to nurture other leads for the long term.

You must know what key terms your prospects use to search, which pages are the most visited, and where they go from there. Continually optimize your website to attract, engage, and nurture prospects.tor

Social MediaFollowers, likes, sharesYour social media platforms (Facebook, LinkedIn, Twitter) are where you truly build your brand through. They allow you to create a community of loyal customers, employees, and future employees through regular content distribution.

Social media is the appropriate place for you to share your views that are more socially and politically oriented, such as environmental responsibility, diversity (cultural, racial, gender, age, etc.), and so on. It is a great place to post new job openings, have current employees discuss the importance and impact of those roles, etc.

In short, your social media properties are where you correctly position your company.

Read about the third Critical Success Factor, “Automation”.

Critical Success Factor 3: Automation

Business women working on automating tasks

Both Marketing and Sales Automation are crucial to the success of B2B sales.

Marketing Automation

PurposeTo automate the creation and nurturing of a lead by delivering the right content at the right time based on action previously taken (or not taken) by the prospect.

To provide intelligence on the buying intent and readiness of marketing created leads and automate the handoff to the next step based on lead scoring and grading.

Used byMarketing
How it should workShould be set up to send targeted messaging to a targeted list in the right logical sequence, grade and score the leads based on the action they took and their profile (title, company size and industry, etc.), and automatically flag the right high-scoring leads in the system that Prospecting and Sales work with.

Sales Automation

PurposeTo automate, facilitate, and accelerate the time consuming and expensive one-on-one new customer-acquisition related activities in which your Prospecting and Sales teams typically engage.
Used byProspecting, Sales
How it should workMarketing Leads should only be made available in the CRM used by Prospecting and Sales when that lead is ready to be further qualified.

The system should enable the Prospecting team to see their high-priority work views (those they have already contacted but have not yet fully qualified) separately from their general prospecting pipeline (those they haven’t touched at all or are still pursuing to make first contact).

The final status of the lead here is SQL (Sales Qualified Lead), which means the lead is qualified and has agreed to a meeting with a sales rep.

The system should be able to do validation and ensure that all the necessary fields are filled out.

The system should automatically assign the lead to a sales rep and send the rep a notification email without the Business Development Rep having to do anything further than changing the status when all fields are completed.

Such automation ensures data integrity, accelerates sales, and avoids human error.

Figuring out how much to pay for Automation

There are several marketing and sales automation tools available, and at significantly varying prices. The question is, how much should you pay for a given automation tool?

The answer, generally, is that it depends on what you need—more capability and flexibility comes at higher prices.

However, we think that a better answer comes from considering its impact on the productivity of your various teams. Remember that your payroll is likely the single largest expense category for your company. You should seek to automate anything that improves productivity (improves the ability of the same employees to do more without working longer hours).

Here is a simple analysis to make the point. Let’s assume that your average, fully burdened salary for a member of your marketing/prospecting/sales team is $50,000 per year.

Product A is clearly far cheaper than Product B. However, Product B can improve productivity by 10% while Product A can improve productivity by only 5%. In the end, Product B is the superior value since the question is not just how much the product costs, but how much impact it has on your operations. The last line compares the two numbers by dividing the net value by $50,000 to arrive at the net productivity gains.

Product A Product B
Fee / user/ year ($)3001,800
Productivity Gains (%)5%10%
Productivity Gains ($)2,5005,000
Net gains ($)2,2003,200
Net gains (%)4.4%6.4%

 

The Issue with Data—What is too much versus too little

One of the recurring problems we come across is that the management’s need for data is at odds with its need for employees to keep their work simple and efficient. If you want a lot of data, then you are asking your people to spend more time on data entry and less time on what should be their primary work. Automation can help free your employees from carrying out mundane, repetitive tasks, allowing them to do more valuable work.

The key is to get the data you need as a natural outcome of the work they do. This is a lot easier said than done, and any system that you use must be thoroughly evaluated before implementation.

The first step is to identify the essential data you need to qualify a lead and move her through your sales stages. This should not require much data, but it should be clear to all your teams that without this information, they are likely to waste a lot of time and effort trying to engage the wrong people.

On top of that, there may be additional data you want to collect, but be judicious and let employees provide this in a free text format rather than forcing them to enter into discrete fields. You are far more likely to get useful information this way, since forcing them to enter data could prompt them to just click on something to get past your validation.

The end goal is twofold: to provide employees with reports and dashboards that help them manage their day-to-day productivity, while you gain insight on what is working and what isn’t.

Make these two goals converge, and you will have plenty of high quality—and useful—data.

Read about the final Critical Success Factor, “List Management”.

Critical Success Factor 4: List Management

list management in B2B sales operations

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.

CharacteristicsImportance/Impact
Duplicate recordsYou will find that duplicate records are inevitable as you begin performing list management. 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 outsA key aspect of list management 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.

BouncesEmail 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. Proper list management can help prevent such email bounces and blacklisting.

Email validationIf 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 segmentationThis 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 such list management. The next section covers that.

The Operations that Lead to Success in B2B Sales

Work group of men and women high five over the discussion of B2B sales

Success in B2B Sales: Putting It Together

When assembled, the entire system consists of three very distinct but related processes, each feeding the next with the right kinds of leads for success in B2B sales.

Marketing’s job is to deliver the necessary number of highly targeted MQLs that the Prospecting team will use as its funnel.

The BDRs will then call, qualify, and schedule appointments, thereby delivering the necessary number of SQLs that the sales team needs to build its sales pipeline.

As we have stated, it takes 25-40 dials to reach someone, and you want to make sure that after all that effort, the person reached is the right person. We can’t emphasize enough the need for a highly targeted campaign.

You will notice that the top of each funnel is slightly bigger than the bottom of the preceding funnel. This suggests that each operation must also “make” its own required qualified lead. Prospecting must find its own MQLs in addition to what Marketing provides, and Sales must find its own SQLs in addition to what the Prospecting team delivers.

Finally, this is a closed loop. Not every appointment will happen, and Sales will ask the Prospecting team to reschedule the prospect (lead). More importantly, Sales may find that a prospect is not quite ready to buy and will place the prospect back into Marketing nurture, with a task for Prospecting to try another appointment— say, in six months. Your systems must be well integrated in order to automate this “send back” to the previous funnel.

The overall concept is fairly straightforward. However, given the differences in the three operations— as well as the need for different systems to manage each operation and the need to integrate these systems—the execution part is not that easy.

The key to success in B2B sales is in clearly understanding the Critical Success Factors (CSFs) that will make or break these operations. There four CSFs are: Content, Content Distribution, Automation, and List Management. Read about the first CSF here.

Operational Excellence (Part 3): Sales

increase high quality leads to grow sales and profits

Your sales team is by far your most expensive resource, compared to Marketing and Prospecting. While your marketing must be targeted, the same marketing assets and messaging will go out to large numbers of prospects.  And while your prospecting activity is one-to-one, each engagement happens for a very brief time. A good BDR can work a list of 200 or so prospects in any given month.

Sales, however, is absolutely a one-to-one process and not very scalable. Your sales people will likely find it hard to work with more than 20 or so prospects at any given time.

Objective (s)Every member of your sales team must hit at least 80% of his/her quarterly sales targets on a consistent basis.
ProcessSales Qualify→ Prove→ Propose→ Negotiate→Close

All B2B sales will likely require at a minimum of the following stages.  While there may be more stages, these are the “gateway” stages that determine if a deal will close or not.

  • Sales Qualify—the most critical stage. During the first call, reps must determine: whether the prospect wants to address this issue now rather than later; whether she is part of the decision making process; whether or not pricing is going to be an issue; and whether there are other alternatives that are far more likely to be selected than your product. This last one is the main reason why so many companies miss their revenue targets—they waste too many resources chasing deals that will never close.
  • Prove—Sales reps have to prove that their solution can solve the prospect’s problem and deliver reasonable ROI, so that the prospect will not experience any personal embarrassment from spending resources on an ineffective solution. The question is what kind of proof does the prospect want—a demo, customer references to speak with, ROI calculation, all of the above, or other?
  • Propose— No proposal should be submitted until the first two steps are completed and it is still a go with the prospect. The purpose of the proposal should only be to present the prospecting in writing— what the rep and the prospect have already agreed upon. The rep should NOT give out a proposal unless he or she thinks that the ONLY thing left to do is to negotiate pricing and Terms & Conditions. In other words, a proposal should be made when pricing is the only factor keeping the prospect from choosing your firm, and aside from that, the prospect wants to give you her business.
  • Negotiate—expect some negotiation and be prepared to counter by offering more value rather than price discounts.

If the above stages are done properly, good sales reps can expect to close at least 33% of their Sales Qualified Leads. Otherwise, the ratio is likely under 20%.

Key MetricsAverage deal size; average sales cycle; average closing ratio. If you watch these metrics closely and enforce discipline, your worst performing sales rep should not bring in less than 25% of what your best performing sales rep brings.

Read about the first and second operations in B2B Sales.