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Revenue Marketing: 6 Essential Rules for Success

30 Oct

Over the last decade, I’ve helped to build B2B revenue marketing teams spanning from a few marketers supporting a few sales people to global models supporting 10,000+ sales representatives. While the challenges of different organizations are often unique, I think there are a few key revenue marketing rules that transcend B2B organization size.

In my last post, I walked through an overview of B2B Revenue Marketing. Now, here are my five key tenets to making sure that your revenue marketing programs are as good as they can be:

(1) Focus on revenue: While this seems incredibly obvious, most B2B marketing organizations focus on other things. While leads and pipeline often lead to revenue, focusing on leads and pipeline metrics can create conflict between marketing and sales. The most important metrics for revenue marketers are (a) the amount of marketing-sourced revenue driven by marketing programs and (b) the effectiveness of the marketing investment (ROI). While pipeline goals are important to see how thing are progressing — they are not a substitute for revenue goals. In my experience, lead goals such as the quantity of leads or the number of qualified leads tend to be completely counterproductive.

(2) Sign-up for accountability: Revenue marketers should be paid like sales people. They should have a  quota based on the level of investment that they control and a significant portion of their pay should be variable based on performance (i.e. revenue). Great revenue marketers should be highly compensated. the key to this, however, is true marketing accountability for revenue and results.

(3) Make marketing & sales as a single integrated function: Every dollar spent on revenue marketing is a dollar that could have been spent on sales. For revenue marketing to make sense, it needs to provide leverage to the sales team and allow the sales organization to scale cost-effectively. If you are a young company and want to grow sales at 100% or more per year, you’ll need to get the right balance of sales and marketing investment to support hyper-growth. No matter what your goals are, it’s important to look at marketing and sales as a single continuous function (hopefully with different owners), with joint planning, shared goals, and a clear model for resource allocation.

(4) Design a process that eliminates conflict: Too often, marketing organizations sabotage themselves by putting in place lead generation processes that create conflict with sales. A bad lead process creates a rapid death spiral that looks like this: (a) marketing sends tons of leads, (b) sales says the leads are weak, (c) sales stops calling the leads, (d) marketing says sales is weak, (e) marketing stops getting any ROI from its investments, (f) people get fired.

From my experience, the number one source of friction tends to be the definition of a qualified lead. If sales and marketing are arguing over whether a lead is really qualified — or whether lead quality is high enough — you likely need to fix your definitions and processes. You can find my thoughts on lead qualification best practices here.

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Predictive Analytics Will Transform B2B Sales & Marketing Execution

11 Sep

Consumer marketers have become adept at driving revenue based on predictive analytics. Potential customers are routinely scored on a wide variety of attributes from lifestyle to promotion receptiveness.  These scores allow consumers to be  segmented into groups based on shared interests, purchase likelihood, and total buying power. By starting with highly differentiated segments, marketers can design programs that are highly relevant and effective.

This is not the way that B2B sales and marketing works in most organizations today.

Yet, B2B is a ripe environment for predictive analytics: selling costs are high, sales probability is low, and resources are very expensive. While the language of B2B marketing and sales is full of references to probability — customer funnels, response rates, conversion rates, close rates, call-to-close ratios — it’s rare to see B2B organizations leverage prospect and customer data to score customer attributes, build discrete segments, and allocate resources to maximize the conversion and revenue.

But all of this is about to change. Over the next five years, common consumer marketing techniques will find a happy home in many B2B marketing and sales organizations.

Here are 6 reasons why:

  • Electronic sales processes are creating massive amounts of useful data: Today, B2B buyers spend more time interacting with companies online than they do with sales people in person or over the phone. For every successful sales call they attend, a typical prospect may spend hours interacting with content, reading forums and blogs, and testing sample products. In today’s world, every buyer action leaves a trail of digital clues that signal their context, needs, purpose, and intent.
  • Prospect attributes can be easily deduced from observable data: Most B2B organizations with CRM and content marketing capabilities have enough data to score prospects on purchase probability, likely problems or interests, and potential solution needs.
  • Relevancy matters: Even as the typical portfolio of products and solutions becomes more varied and complex, B2B sales and marketing messages tend to be narrow and simplistic. The patterns that work most consistently are destined to be forever repeated. For prospects, this means that they are often hit with messages and a pitch that ignore the nuance of their particular needs and segmentation. For many prospects, this is a turn-off that is difficult to reverse.
  • Sales & marketing funnels are based on probability: Typically, 2% of targets respond to a marketing campaign, 60% of leads are accepted by sales, 50% of accepted leads become opportunities, and 25% of opportunities close. When you look at the full marketing and sales funnel, a pathetic 1:667 targets becomes a closed deal. Using predictive analytics to improve any stage of the funnel has the potential to create incredible value. Continue reading →

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Analysis: Just 28% of B2B Sales Compensation Pays for Selling

15 Jun

In the movie industry, smart investors measure how much of each dollar “hits the screen.” Money spent on the product — film production, actors, sets, and the like — has the potential to generate a return. Money spent off the screen on insurance, cars, administrative staff, paperwork, lawyers, accountants, security, and other back office functions typically doesn’t generate any return.

The same is clearly true for managing sales organizations. Sales compensation budgets, in particular, have the biggest impact on revenue and margin when the dollars  pay for selling. They have less of a direct impact when they pay for sales operations, sales administration, and sales time spent on non-selling activities.

So how much of every sales compensation dollar “hits the screen?” In a typical B2B sales organization the answer is: shockingly little. Based on my analysis, roughly 28% of sales compensation actually pays for selling. The rest pays for other peripheral activities.

What are the biggest syphons of sales resources?

(1) Non-Selling Time: According to a recent Accenture study, just 41% of sales rep time is spent on selling via the phone or face-to-face. 59% of sales time is spent doing other things. In particular, nearly a quarter of sales time is spent in meetings and on administrative tasks. The remainder of time is spent in training, account service, and account research.

(2) Sales Operations and Administration: It’s not uncommon to see sales support budgets of 20% or more. Sales support teams often handle everything from quoting to order-takign and fulfillment. In some large organizations, team manage go-to-market structure, sales compensation, sales training, and other sales related functions.

(3) Turnover and New Rep Training: According to the Accenture study, 25% of sales representatives changed jobs last year (11% left voluntarily, 14.8% were terminated). With a typical new representative hiring and ramp time of 6 months or more, at least 12.5% of sales compensation is spent on ramping new sales representatives to productivity.

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Categorizing Sales Prospects: Understanding Propensity & Engagement

12 Jun

As the sales process becomes digitally observable, smart sales and marketing organizations are developing sophisticated mechanisms to electronically score leads and prospects.

A typical business-to-business sales person manages 1,000 – 2,000 sales contacts. If they are lucky, they’ll also interact with hundreds of new leads each year. In sophisticated organizations, leads and prospects “travel” with electronic scores that help sales people prioritize outreach and focus on the highest value accounts. This scoring information is typically one dimensional: often a single score or categorization that captures demographics facts, project details, qualification information, and measures of engagement.

A much better approach is to evaluate and score prospects based on two discrete dimensions: propensity and engagement:

  • Propensity Scores: For any lead or prospect, a propensity score compares collected demographic information to that of other prospects to determine the probability of a purchase and potential opportunity value. If you sell hammers, a construction contracting company might be a high propensity target while a dry cleaner may not. By considering attributes such as industry, employee size, contact title, budget, revenue, headquarter country, company revenue, and company profitability, propensity scores qualify leads and prospects based on their fundamental attributes and statistical propensity to buy.
  • Engagement Scores: The problem with propensity scores is that they aren’t able to differentiate a cold lead that doesn’t know you exist from a prospect that has done their research and is ready to buy. Engagement scores, on the other hand, vary in real-time based on electronic measurement of prospect activity, increasing whenever a prospect takes an action that indicates interest in your products or services. A sophisticated engagement score might measure a prospect’s web visits to your site, calls to your office, participation in online communities, mentions of your company in social media, interaction with an electronic product demo, content downloads, online video consumption, and email communication. If they stop interacting, the score would automatically decline.

For most companies, propensity and engagement scores are discrete and mutually beneficial. A prospect that is high engagement / low propensity may be eager to talk but unlikely to buy. A prospect that is high propensity / low engagement will be hard to reach and unready to engage with sales. Propensity scores tend to be relatively static while engagement scores should be continually changing.

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The CRM Crisis: Why Sales Force Automation Failed

4 Jun

Just two decades ago, B2B sales people spent most of their time filling out computer forms to manually track hundreds of pieces of data on customers and accounts, mostly for the benefit of managers who watched their every move. Two decades later, virtually nothing has changed.

Over the last twenty years, consumer web and desktop software has evolved: the consumer world has become social, mobile, and location aware. Interfaces have become simple, intuitive, and pleasurable. Data collection has become automated and increasingly intelligent.

During the same period, enterprise software has made surprisingly little progress. In the case of sales force automation (SFA) and customer relationship management (CRM) software, the lack of innovation in the user experience is particularly remarkable. While new software-as-a-service models have streamlined deployment, customization, and IT management of CRM tools, the tools themselves haven’t evolved at nearly the pace of other technologies.

CRM has a problem: it’s not working as advertised. A 2011 Accenture study of sales effectiveness and CRM usage found that only 16.9% of companies using CRM believed that their CRM tools improved win rates. Only 11.8% believe that their CRM tools shortened sales cycles. And only 15.4% and 3.7% believe the tools increase revenue and margin respectively. Where did CRM tools help? The survey showed that slightly more than half of companies believe that CRM helps to improve communication between sales people and their managers. Why? Likely because forcing sales people to document every activity improves managements ability to monitor activities and to discuss them with their teams.

Today, almost every business-to-business organization struggles with basic sales force management problems that have plagued the industry for decades:

  • Sales activity tracking remains a largely manual effort: CRM systems are filled with information on customers, prospects, accounts, and activities. It’s not uncommon for companies to require more than a hundred fields of data on a typical opportunity and the corresponding accounts and contacts. What do all of these data points have in common: they are typically manually entered into a web browser or software application by the sales people themselves.

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Beyond Lead Gen: Marketing-Driven B2B Calling Campaigns

29 May

Before electronic lead generation became the normal mode of operation for B2B companies, sales people dialed for dollars. Even today, the best sales people fill time between leads with outbound calls to the best names that they can find.

In my previous role managing demand generation for a 1,000+ person salesforce, we created parallel programs for lead generation and outbound calling. In any given quarter, the volume of leads was typically limited by the amount of budget allocation to lead generation. Our outbound calling campaigns, however, could cost-effectively reach many more prospects and as a result would generate 3x – 5x the pipeline of our lead generation efforts, albeit at a lower amount of pipeline per call.

Here are a few key best practices for running outbound calling campaigns:

– Keep leads (inbound) and targets (outbound) separate: a cold target is not a lead. Mixing terminology for the two creates confusion and devalues the high priority leads.

– Think of calling campaigns programatically: Start with a theme or play, use business intelligence to target the right lists, customers and prospects, develop talking points, and create marketing materials to support sales.

– Always call leads first: Inbound leads expect a quick response, dont’ keep them waiting. Calling canpaign targets don’t know that you will be calling, so they can always wait until all the leads have been covered.

– Use a tool to track campaign progress: You’ll need software to load targets, queue outbound calls, collect outcomes, and tie calls to pipeline.

– Train your sales teams on every campaign: You’ll want to make sure that your teams understand why the campaign is vbeing developed, what the desired outcome is, and the key things they will need to know tobe successful.

– Get the script or talking points right: The most effective calling campaigns make a crisp and compelling pitch to prospects. test campaigns before launching and quickly kill campaigns that aren’t driving significant conversion.

– Use an offer to drive conversion: A calling campaign is nothing more than an organized series of cold calls on a common theme to a defined set of targets. To improve cold call conversion, provide sales teams with one or more special offers that they can use to lure prospects into a valuable conversation.

– Make calling campaigns part of your holistic nurture efforts: Outbound calling campaigns are a great way to systematically follow-up on old leads and contacts or to nurture customers or prospects in a systematic, measurable way.

While your lead generation budgets will inevitably limited — outbound calling campiagns are a great way to drive incremental measurable pipeline and revenue while helping sales teams improve productivity and revenue / FTE.