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Marketing’s New Role:Improving Sales Productivity
John M. CoePresident
Protocol B2B
1Protocol Overview
Protocol
Revenue $120MM +
Expertise in key industries> Financial services> High-tech/software> Healthcare> Government services> Telecom> Pharmaceutical> Automotive> Energy> Retail
14 locations across the U.S. and Canada
Protocol B2B – Colorado Springs
15 year old firm with 275 people focused only on B2B
Three service offerings1. Lead Generation and Qualification2. Sales Coverage3. SMB Marketing
Fully integrated six-step process that is media neutral
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2Protocol Locations
3Protocol B2B Experience
Software
Technology
Telecommunications
Energy
Finance
Technology
Manufacturing
Transportation/Logistics
Travel/Tourism
Pharmaceuticals
Health Care
ADP
Alaska Air
American Express
Aspect Communications
AT&T
Cisco
Continental Airlines
Dell Computer
Duke Energy
Federal Express
Hay Group
Hewlett Packard
Ibis Group
IBM
iPass
MCIMercury InteractiveMeridian IQ Microsoft Mitsubishi NaviMedexNCR NEC OracleQwestSABAShell OilStorageTekRitz Carlton ClubThompson HealthcareUnited TechnologiesUPS Xerox
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4So Who’s John Coe?
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 & MarketingMcGraw Hill – now in second printing
5What’s Going On in B2B?
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!
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Integrated Marketing Communications
PR ADV D MTradeShows Events Sales
Business Development/Lead Process
IntegratedSales Coverage
Hierarchy of Sales & Marketing Integration
Tactical Expertise
1980’s
1990’s
Today
Future
7Observations on Lead Generation – Group Discussion
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
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8Beyond Lead Generation – Marketing’s New Role
Two traditional primary roles of marketing and sales1. 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
9The Challenges Facing Sales Management
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 differentbasis
> 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
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10The Sales Management Quandary
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
11Designing a New Sales Coverage Model
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
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12Here are the key questions to ask
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
13Transition of Sales Coverage Models
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?
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14Technology Rides to the Rescue
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
15Only 4 Media are Targetable & Proactive
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?
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16New Sales Coverage Model
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 themost 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
60%
30%
60%
90%
40%
70%
40%
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Acquisition Growth Loyalty Reactivation
Mar
ketin
g M
ix
Sales
Direct Marketing
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18Total Sales Coverage Model
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 ormargin terms – how much can you afford?
>Initial sale>Yearly revenue>Lifetime value
19Two Basic Productivity Results
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
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20Five Steps to Developing A New Sales Coverage Model
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
21Five Steps - Continued
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
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22Buying Process vs. Sales Cycle
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
23Decision Tree
Multiple definitions to describe the people by function>Decision maker
• Individuals• Teams
>Decision influencer• Official• Unofficial
>User>Economic buyer>Specifier>Gatekeeper or “no” person
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24Buying Process Combined with Decision Tree
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
25Segmentation - Who’s going to get you there?
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
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26Segmentation - Why Do It?
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
27Segmentation Dangers
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
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28Micro-Segmentation or Clustering
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.
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Geographic
SIC/NAICS
Employee size or revenue
Location type -- headquarters, plant, etc.
Year founded
Fiscal year
1. Demographic Segmentation
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302. Relational Demographic Segmentation
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
313. Sales Cycle Segmentation
Suspect
Inquiry
Qualified lead
Proposal/quote
First purchase
Repeat purchaser
Long term or high value customer
Past customer
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324. Competitive Segmentation
Direct competition- same product or service
Indirect or alternate solution—offset solution as competitive definition
Budget prioritization or restriction
Status quo attitude
335. Behavioral Segmentation
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
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346. Customer Segmentation
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
35How Micro-segmentation Impacts Marketing Communications
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
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36The Importance of B2B Data
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
37The Current State of Contact Data
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
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38Internal Company Data
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
39Data Hygiene
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
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40Merge/Enhancement of B2B Data
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
41Frequently B2B Encountered Data Problems
In order of frequency1.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)
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42Developed Lists
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
43Hand-Off, Measurement and AnalysisSales 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 toaccurately 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
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44Sales Lead Hand-Off and Feedback
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
45Measurement in B2B
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
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46Four Activity Measurements
Cost per thousand or CPM
Response rate
Cost per inquiry
Cost per lead
47Value Per Lead
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
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48Three Result Measurements
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
49To Sum Up
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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