Improving Sales Productivity Beyond Lead Generation
0 Marketing’s New Role: Improving Sales Productivity
John M. Coe President Protocol B2B
Protocol Overview 1
Protocol Protocol B2B – Colorado Springs Revenue $120MM + 15 year old firm with 275 people Expertise in key industries focused only on B2B > Financial services > High-tech/software Three service offerings > Healthcare 1. Lead Generation and Qualification 2. Sales Coverage > Government services 3. SMB Marketing > Telecom > Pharmaceutical Fully integrated six-step process that is > Automotive media neutral > Energy > Retail 14 locations across the U.S. and Canada
1 Protocol Locations 2
Protocol B2B Experience 3 Software ADP MCI Alaska Air Mercury Interactive Technology Meridian IQ American Express Telecommunications Microsoft Aspect Mitsubishi Communications Energy NaviMedex AT&T Finance NCR Cisco NEC Technology Continental Airlines Oracle Manufacturing Dell Computer Qwest Duke Energy SABA Transportation/Logistics Shell Oil Federal Express Travel/Tourism StorageTek Hay Group Ritz Carlton Club Pharmaceuticals Hewlett Packard Thompson Healthcare Health Care Ibis Group United Technologies IBM UPS iPass Xerox
2 So Who’s John Coe? 4
15 years sales and sales management > BF Goodrich Chemical – Product Manager > Quaker Oats, Chemical – Technical Sales and National Sales Manager > West-Agro – Director and Sales & Marketing > Samuel Bingham – VP Sales & Marketing 25 years B2B direct/database marketing > Integrated Target Marketing – President > Database Marketing Associates – Founder > IBM – National DM Campaign Manager > Rapp Collins Worldwide – Sr. VP B2B Worldwide > Sales & Marketing Institute – President > And now President of Protocol
The Fundamentals of Business-to-Business Sales & Marketing McGraw Hill – now in second printing
What’s Going On in B2B? 5 Buyers are changing their behavior > 72 % of all business people now start their buying process with search > Purchase without a field sales person is not unusual > Many more “buyers” are involved with complex purchases Sales people are having increasing difficulty seeing buyers > Number of face-to-face calls now averages less than 2.2/day > Key buyers are resisting sales calls unless they deem them needed > Cost per call is increasing faster than inflation - $500+ is common Communication clutter is great and growing – how to break through? > 5,000 – 8,000 messages a day Lead generation remains the primary objective of marketing > But, it is harder and more expensive to find quality sales opportunities
Sales people need help from marketing like never before!
3 Hierarchy of Sales & Marketing Integration 6
Future Integrated Sales Coverage
Today Business Development/ Lead Process
1990’s Integrated Marketing Communications
Trade 1980’s Sales PR ADV D M Shows Events
Tactical Expertise
Observations on Lead Generation – Group Discussion 7
Sources of inquiries Response rates Offer strategies Difference between commodity and complex sale Quantity vs. quality of sales opportunities Lead qualification methods and results Lead cultivation process Hand-off and feedback – closing the loop Measurement of success
4 Beyond Lead Generation – Marketing’s New Role 8
Two traditional primary roles of marketing and sales 1. Find and get new customers (marketing and sales) 2. Keep them and sell them more (sales)
Now, marketing is needed to help cover the customer base as sales cannot see all the decision makers, influencers and users. > In fact, they never could but didn’t tell anybody > As an example, for a technology sale to a large company Marketing Sherpa reports that 22 people are involved in the buying decision – how many do you think will willingly see a sales person?
While that is the BIG IDEA, the specifics of when and how are quite complicated
The Challenges Facing Sales Management 9
Sharing of customer communication and coverage responsibility with marketing is an unnatural act! > High level of proprietary toward the sales responsibility and customers > Compensation system is not aligned to this new approach The sales organization has been hired and trained on a different basis > My territory, my customers, my compensation, my job > Best sales person is frequently a independent operator, short term reward orientated, and not frequently a team player Prior marketing programs have not, in general, been well received by sales > How about those crappy leads, and they want to do what?
This change will require a dramatic mind and behavioral modification
5 The Sales Management Quandary 10
From The New Selling Solution Profile of sales people >20% are eagles – consular selling >80% are regular birds – push selling Profile of buyers >20% innovators/early adopters >80% pragmatics, conservatives, laggards Implications >64% of the sales calls are being made by the “regular” sales people on the toughest buyers – so why is it so tough to sell today?
>An improved lead and coverage system will help
Designing a New Sales Coverage Model 11
Four basic stages of the customer life cycle
>Acquisition or - lead to sale process
>Growth and retention – in depth contacts •Up-sell •Cross-sell
>Loyalty/strategic relationship • Share of customer •Referral
>Reactivation
6 Here are the key questions to ask 12
What degree of face-to-face relationship is really required in today’s virtual world to find, keep and grow customers? > Commodity product or service > Modified product or service > Customized product or service
What is the optimized blend of marketing communications and face-to-face appropriate across the four customer life-cycle phases > Cost per acquisition > Cost per customer retention What is the receptiveness of the customers to receiving communications via mail, email and phone? > Ask – do not assume
Transition of Sales Coverage Models 13
The first major change in sales coverage was to segment customers by revenue and then assign a media of contact. >Small – mail or phone >Medium – telecoverage >Large – sales people and NAM’s (now SAMA) >Also, more sales coverage delegated to distributors and business partners for small customer segments
>But, this first transition in sales coverage model ignored some critical sales coverage issues • Which ones?
7 Technology Rides to the Rescue 14
The second phase was to deploy technology CRM is now pervasive in most all organizations. >50-60%+ of CRM initiatives have failed or have not met objectives – why?
Internet and e-business models have proliferated. >Email became the new savior, but is overused >Internet enabled point solutions do help
Technology alone will not reach the objective of increasing overall improvements in sales productivity > It’s not process or technology but people that matter > Most technology is seller based and is not necessarily received well by the buyer > Look what search is causing
Only 4 Media are Targetable & Proactive 15
Four primary contact media >E-mail: $0.05 – 0.40+/contact • New streaming and other technologies
>Mail: $0.50 – 10.00+/contact • Mail is coming back
>Telephone: $5 – 35+/contact • Fastest growing media in B2B
>Sales call: $100 – 1,000+/contact • How do you calculate cost-per-call?
8 New Sales Coverage Model 16
The new sales coverage model is the blending of the four primary contact media across all four stages of the customer life cycle to send the right message, at the right time with the most acceptable and/or impactful media of delivery.
Advertising, PR, trade shows, web-sites, etc. are all “surround sound” and while important, do not target an individual with a specific message and offer.
The percentage of each contact media is first dependent on the stage of customer life cycle.
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Sales Cycle Phases
100% 10% 90%
80% 40% 40%
70% 70% 60% Sales 50% 90% Direct Marketing 40% Marketing Mix Marketing 30% 60% 60%
20% 30% 10%
0% Acquisition Growth Loyalty Reactivation
9 Total Sales Coverage Model 18
Blend of the contact media is also dependent on the nature of product or service sale >Commodities >Customized product or service >Designed or engineered
Another consideration is the value of the customer in revenue or margin terms – how much can you afford? >Initial sale >Yearly revenue >Lifetime value
Two Basic Productivity Results 19
Cost of the sales coverage for a current customer >6 calls @ $350/call = $2,100 >3 calls, 9 telephone calls, 12 mailings and 12 emails = $1,400 or 33% reduction in cost of coverage
Increase is sales time to cover prospects and customers who could not be seen >20% more time = 120 calls (600 calls/yr) >6 calls to make a sale = 20 more sales >20 x value of sale = lots of money
Two examples: >Medical equipment company >Major oil company
10 Five Steps to Developing A New Sales Coverage Model 20
Step 1: Benchmark existing sales and marketing process >Cost of inquiries >Conversion rate of inquiries to qualified leads >Cost of a qualified lead >Average number of sales calls per week/month >Types of sales calls and percentage of each • There can be 8 or more types of sales calls >Cost of a sales call >Number of calls required to close a sale >Cost of a sale >Win rate of quote to sale >Customer decay rate >Percentage of revenue devoted to sales and marketing
Five Steps - Continued 21
Step 2: Establish key gaps between benchmarks and desired goals > There will be obvious one to close > Typically the sales call type and percentage will jump out Step 3: Develop required capabilities to close the gaps > Internal vs. outsourced capabilities debate Step 4: Engineer the New Sales Coverage Model > Decision tree and buying process will be key to model > Sales involvement is critical – commitment and knowledge > All media should be considered – even new digital ones > Who sends the message needs careful consideration Step 5: Execute, measure and adjust > Beta test is advised on a territory or business line
White Paper Hand-Out
11 Buying Process vs. Sales Cycle 22
Buying process is key to achieve customer engagement >Varies by type of product or service • Commodity • Modified • Customized >Varies by market segmentation • Size of company • Industry >Varies by nature of competition •Direct • Indirect • Budget • Status quo
Decision Tree 23
Multiple definitions to describe the people by function >Decision maker • Individuals • Teams >Decision influencer • Official • Unofficial >User >Economic buyer >Specifier >Gatekeeper or “no” person
12 Buying Process Combined with Decision Tree 24
Observations: >Different people will surface and become involved at different stages of the buying process • Some will even be engaged at different stages – e.g. an executive might start the process but back out once delegated
>The number of people and steps will be greatly dependent on the nature of the product/service sale • Complex sales of high dollar amounts will be the most
>The buyers have a bio-rhythm to purchase – be careful not to rush it arbitrarily or they will likely disconnect • At times, the buying process will be interrupted only to start again
Segmentation - Who’s going to get you there? 25
Macro segmentation -- how your company or group is organized to go to market > Automotive > Electronic
Micro segmentation -- clusters for marketing campaigns > Are sub-segments of the macro-segments
One-to-one segmentation -- field sales or telesales
13 Segmentation - Why Do It? 26 Leads to relevancy of message and offer to break through the clutter.
Tighter targeting reduces market size.
Establishes the most important data elements for database.
Focuses the campaign on the customer vs. the company or product
Helpful in setting lead qualification criteria
Segmentation Dangers 27
Too many segments -- too many projects
Wrong criteria chosen for segmentation
Inability to obtain and/or update the data
No people or process support this approach, particularly sales and distributors
14 Micro-Segmentation or Clustering 28
Micro-segmentation is a process of grouping together individuals and/or companies who share common characteristics into clusters that are relevant in some way to your product/service, selling process or company.
1. Demographic Segmentation 29
Geographic
SIC/NAICS
Employee size or revenue
Location type -- headquarters, plant, etc.
Year founded
Fiscal year
15 2. Relational Demographic Segmentation 30
Factual information/data that is linked to the selling opportunity >e.g. Equipment in use
Sales input can be helpful in identifying the key relational data element(s) >Ask sales what piece of information would change their sales approach or presentation?
Untapped opportunity for most companies >Competitors can segment using demographic data just as well as Henkel can. >Stealth marketing can result
3. Sales Cycle Segmentation 31
Suspect Inquiry Qualified lead Proposal/quote First purchase Repeat purchaser Long term or high value customer Past customer
16 4. Competitive Segmentation 32
Direct competition- same product or service
Indirect or alternate solution—offset solution as competitive definition
Budget prioritization or restriction
Status quo attitude
5. Behavioral Segmentation 33
General inquiries – primarily web site hits today Response to specific offers – all media
Inquiries from search
Responses to email
Trade show or seminar attendance
Multiple inquiries -- company or individual
Purchase and repeats purchases
Calls to customer service
17 6. Customer Segmentation 34
Is the most common analysis >Product or service purchase profile >Sales revenue (large, medium, small) >Margin or profit (not done enough) >Geographic characteristics >RFM - recency, frequency and monetary is a standard direct marketing method of customer analysis -- may not work in B2B >Other analytic approaches
How Micro-segmentation Impacts Marketing Communications 35
Any good marketing campaign plan and creative brief should start with a definition of the “target audience” or micro-segment
The communications will be sharper, and thus produce improved responses and results
The copy is then written with a clear voice that is speaking to the micro-cluster
It naturally creates customer focused communications
18 The Importance of B2B Data 36
50-70% of the results of a direct marketing campaign are dependent on the list > The targeting and segmentation process calls out the list needed >The data accuracy is key to a good list – lists are all different
The single biggest reason CRM implementation has failed in B2B is the poor quality of the data
The value of accurate B2B data is significant as the cost of a lost sale can be high
The Current State of Contact Data 37
The Business Card Test Decay rate of personal contact information is 70.8% in 12-months – one or more changes in the business card (excluding fax numbers) >3.8% name change >65.8% title/job function change >34.2% company job change >41.9% address change >42.9% phone number change >37.3% email address change
19 Internal Company Data 38
Four typical data silos >Accounting >Marketing – multiple lists are the norm >Sales – contact data for sales person >Customer service
Nobody is responsible for overall data accuracy beyond their department’s function and usage
No on-going process is in place to clean the customer and prospect data resulting in multiple duplicates
Try this test – select 50-100 customer records and call them to check accuracy of both demographic and contact level data
Data Hygiene 39
Two basic B2B data hygiene issues >Company information >Individual contact information
What are the data hygiene processes to use? > Brainstorm all that could be used and implement them all
Who in your organization is responsible for data hygiene and do they know it? >Primary responsibility >Shared responsibility
20 Merge/Enhancement of B2B Data 40
Most internal B2B data does not have standard demographic data such as SIC/NAICS code and company size.
First, CASS certify addresses and run NCOA against house files
Then merge/enhance against large compiled B2B data source such as D&B, InfoUSA and Experian or Market Models > Normal results are 60-75% match rate > Problem is the matching algorithms and inability of software to find the duplicate record – how do you list and spell DuPont? > Likely that a look-up will be required to complete the enhancement process > Other methods will be needed to complete the data – telemarketing > Set standards of data input to reduce future non-matching
Frequently B2B Encountered Data Problems 41 In order of frequency 1.Different address/same company 2.Characters inverted during data entry 3.Different spellings/same name 4.Last name only (no first name) 5.Different company spellings 6.No company name 7.Missing information 8.Duplicate records (customer files)
21 Developed Lists 42
A developed list starts with a highly targeted companies that serves as the “skeleton” for data enhancement. Requires merging multiple files from multiple sources >Sophisticated B2B DP experience and software is required
Necessitates paying for data you won’t use >Higher accuracy and response rate may justify additional costs
One method is to build the data by site from calling the companies – we call it site building Consider outsourcing the entire database development process
Hand-Off, Measurement and Analysis 43 Sales hand-off and feedback system is critical to success and measurement > Sales must see the benefit to them for accurate and timely feedback Measurement has three tiers that are sequential and take time to accurately measure campaign success > Activity – response rate, cost per response or lead > Value – value per lead > Result – conversion rate, revenue, gross margin and LTV Analysis > Qualitative – assessment of all involved > Quantitative/Analytics – data driven analysis Campaign Modification > Over time, results will improve as proper testing and analysis leads to learning of what works and what doesn't > Failure in DM is not necessarily a bad result – pushing the DM envelop
22 Sales Lead Hand-Off and Feedback 44
Define the benefit to sales for feedback > There are real benefits, but they are infrequently identified and communicated to sales > What are some? > Distributors and business partners represent a more difficult situation for feedback
Flow control > The number of leads sent to sales in any week or month > The 10% guideline
Method of distribution to field must be easy but impactful > Web-based interface to CRM system > Phone calls or email to drive follow-up
Measurement in B2B 45
Measurement and accountability are top-of-mind with senior management now – we need to prove our value or be gone!
The measurement ladder >Activity measurements
>Value measurements
>Result measurements
23 Four Activity Measurements 46
Cost per thousand or CPM
Response rate
Cost per inquiry
Cost per lead
Value Per Lead 47
This is a new measurement that attempts to place a value (not cost) on each lead > Is particularly important on long sales cycle products/services
Is a measurement that bridges the gap between cost and result measurements >Which would you like to present to management?
Requires a prior result or several assumptions >% of sales opportunities converted to sale (10-20% is normal) >$ value of the sale - first, repeat or lifetime >Obtain the agreement of finance and senior management
24 Three Result Measurements 48
Breakeven > How many sales are needed to pay for the campaign? > Gross margin on the sale is best, not revenue
Expense to Revenue or E/R >1/10 to 1/25 is the normal B2B range >Can be a replacement for ROI
Lifetime value > 3-year is usually acceptable > Is a calculation that can highlight the value of customer marketing
To Sum Up 49 Sales needs help – they will probably admit it today Direct marketers have the tools and skills to help The time is now to move beyond lead generation as the primary role for marketing communications This may mean some or all of this activity reports to sales Improving sales productivity is now job #1 It will not be easy or fast, but is critical to success
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Questions or Comments? [email protected] 719-536-3300
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