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. 17 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