Sunday, June 30, 2013

Why Marketers Need a Revenue Growth Theory

For the past several years, marketers have faced growing pressures to prove the value of their activities and programs. In a 2011 survey of CMO's by IBM, nearly two-thirds of respondents said that return on investment will be the primary measure of the marketing function's effectiveness by 2015.

Despite all the recent focus on measuring and quantifying the performance of marketing, it is clear that marketers still have work to do to build credibility in the C-suite. A study conducted earlier this year by ITSMA, VisionEdge Marketing, and Forrester revealed that only 9% of CEO's and 6% of CFO's use marketing data, metrics, and analyses to make business decisions. In a study last year by The Fournaise Marketing Group, 80% of CEO's said they do not really trust marketers. According to Fournaise, most CEO's believe that marketers are disconnected from the financial realities of their companies.

This lack of credibility exists primarily because marketers don't typically demonstrate the connection between marketing programs and important business outcomes. Most marketers focus instead on measuring marketing activities, spending, and the immediate results of marketing programs (response rates, etc.).

The principal mission of marketing is to drive revenue growth. As Sergio Zyman, the former CMO of The Coca Cola Company, wrote more than a decade ago, "The sole purpose of marketing is to get more people to buy more of your product, more often, for more money." (The End of Marketing As We Know It, 1999)

Every marketing activity or program is (or should be) designed to generate revenue either directly or indirectly. It's up to marketers to explain the links between marketing activities and revenue growth and make those links visible and understandable to the CEO and other senior company leaders.

To effectively demonstrate the connection between marketing activities and revenues, marketers need a revenue growth theory. I know from experience that many business and marketing leaders have a deep-seated aversion to anything that's "theoretical," but in this case, a theory is essential.

At the most basic level, a marketing strategy is a theory or a hypothesis about revenue growth. It's a big if-then statement that essentially says, "If we do A, B, and C, then our revenues will grow."

More specifically, a marketing strategy is a collection of if-then hypotheses that collectively describe a company's theory for growing revenues. The individual if-then statements are combined to create chains of cause-and-effect relationships that connect individual marketing activities to revenue generation. A simplified version of one of these cause-and-effect chains might look something like this:
  • If we publish an effective blog that offers readers access to compelling content resources, then more potential buyers will identify themselves and consume our content.
  • If more potential buyers identify themselves and consume our content, then we will generate more sales leads.
  • If we generate more sales leads, then we will also generate more qualified sales opportunities.
  • If we increase the number of qualified sales opportunities, then we will close more sales.
  • If we close more sales, then we will produce higher revenues.
With a clear understanding of how individual marketing activities fit into an overall revenue growth theory and the right metrics in place, it becomes relatively easy to demonstrate how individual marketing tactics contribute to revenue growth.

Sunday, June 23, 2013

When Listening to Customers is a Bad Idea

Over the past three decades, dozens of books, magazine articles, and blog posts have been written about the importance of listening to customers. Becoming more customer focused is now a critical strategic objective for many companies, and listening to the "voice of the customer" is seen as an essential ingredient in the recipe for success.

Marketers often have the primary responsibility for gathering, analyzing, and extracting insights from customer input. So, it's important for them to understand that listening to customers in the right way can valuable, while listening in the wrong way or for the wrong reasons is a bad idea.

Companies often seek customer input in order to develop products or services that customers will buy. However, many companies still struggle to develop new solutions that resonate with potential buyers. Of course, a new product or service sometimes fails because a company hasn't listened enough to its customers. But just as often, the failure occurs because the company listens to customers in the wrong way and for the wrong purposes.

In the typical scenario, companies ask their customers what they want and encourage them to describe specific product or service features that would be desirable. The problem is that most customers aren't well suited to perform this task.

Most customers have a limited frame of reference. Like all human beings, most of what they know is based on their past experiences. This means that customers can do a fairly good job of describing what they want when they're asked about familiar products or services. However, when customers are asked to imagine or describe new products or services, they usually encounter what psychologists call "functional fixedness." This is the normal human tendency to fixate on the way a product or service is normally used or on the features and attributes a product or service normally possesses.

Functional fixedness can make it almost impossible for people to imagine new features or functions. In short, most customers have great difficulty describing products or services they've never experienced. As a result, customers often describe features or functions that offer only modest improvements over what already exists. As Henry Ford is credited with saying, "If I had asked my customers what they wanted, they would have said a faster horse."

The key to listening to customers the right way is to shift the focus from specific features or functionality to desired outcomes. Customers may not be particularly good at describing specific solutions, but with a little prodding, they can usually do a great job of describing what they want to accomplish and what problems they face.

Focusing customer input on desired outcomes enables you to understand what customers really value, and this will help you design solutions that customers will be anxious to buy. The outcomes-based approach places the responsibility for designing the solutions squarely on your shoulders. That's where the responsibility should be since you, and not your customers, are best suited to perform this task. So by all means, don't stop listening to your customers. Just be sure you are listening in the right way and with the right objectives.

Sunday, June 16, 2013

Passing the Baton Without Missing a Step- Sales Enablement, Part 3


This is the third of three posts that are discussing the role that marketing plays in helping the sales team sell - what is usually called sales enablement. In the first post, I discussed what sales enablement is and why it is an important issue for most B2B companies. The second post discussed one of marketing's primary sales enablement responsibilities - providing the content resources that will help sales reps advance sales opportunities.

In this post, I'll explain why effective sales enablement also requires marketers to provide information that will enable sales reps to continue prospect relationships without a loss of momentum. In essence, marketing and sales need to work together like the runners in a relay race. Here's what I mean.

As I wrote in my last post, business buyers don't distinguish between marketing and sales activities. From the buyer's perspective, there is one problem-solving process that may result in a purchase. We now know that most buyers are performing research on their own before they are willing to meet with a salesperson. So by the time a potential buyer meets with your sales rep, the buyer will probably have visited your website and accessed several of the content resources you offer.

These self-educated buyers have little patience for "starting over" with a salesperson. They expect their sales rep to come into the initial meeting with a basic working knowledge of their business and industry. Just as important, today's buyers also expect their sales rep to know what has already transpired in the relationship. They want the sales rep to step in and provide new insights that build on what has already occurred and help advance the decision-making process.

To make the transition from marketing to sales without losing forward momentum, marketers must do more than simply provide contact information when they pass a lead to sales. An effective lead hand-off should include significantly more information, such as the buyer persona assigned to the lead, a description of the content plan for the relevant buyer persona, and a list of the content resources developed for that buyer persona.

An effective lead hand-off will also be accompanied by an activity history detailing the prior contacts between the lead and the selling company. The activity history should include the following kinds of information:
  • Outbound marketing offers sent to the lead
  • Outbound marketing offers the lead has responded to
  • Website pages viewed by the lead
  • Content resources accessed by the lead
  • Summaries of any person-to-person communications between the lead and representatives of the selling company
  • The prospect's lead score
Delivering this information isn't as overwhelming as it might first appear. Marketing should have developed a content plan and content resources for each buyer persona for each stage of the buying process. So, this information should already be available. Your marketing automation software should be able to capture most of the lead's activity history and transfer that information to your CRM system when the lead is passed from marketing to sales.

Don't misunderstand me. This type of lead hand-off does require additional work, but it will also provide significant benefits to the sales team and the company.
  • It reduces the amount of time that sales reps must spend on lead research.
  • It eliminates the need for sales reps to guess about what content resources to use.
  • It reduces the need for sales reps to create or customize content.
  • It improves the ability of sales reps to continue prospect relationships without losing momentum.
  • It helps improve sales pipeline velocity.
The changing dynamics of B2B demand generation require a coordinated effort by marketing and sales. That's why sales enablement remains one of marketing's most important responsibilities.

Read Part 1 of the sales enablement series here.

Read Part 2 of the sales enablement series here.

Sunday, June 9, 2013

Create Content that Helps Sales Reps Sell - Sales Enablement, Part 2

Business buyers do not distinguish between marketing and sales activities. From the buyer's perspective, there is one problem-solving process that may result in a purchase. As they work through their decision-making process, what really matters to buyers is the relevance, quality, and credibility of the information they receive from prospective vendors. They couldn't care less about whether the information comes from the marketing department or a salesperson.

To maximize results, what B2B companies need is a demand generation process/system that can address buyers' needs at every stage of their decision-making journey. I call it managing demand generation "from curiosity to close."

Marketing and sales play distinct roles in the demand generation process, but marketing is well-suited to help make the selling process more effective. This role of marketing is usually called sales enablement, and marketing has two major sales enablement responsibilities.
  • Content - Marketers must provide the content resources that will enable sales reps to advance sales opportunities.
  • Information - When a lead is passed from marketing to sales, marketing must provide the information that will enable sales reps to continue prospect relationships without loss of momentum.
This is the second of three posts dealing with sales enablement. In the first post, I discussed why sales enablement is important for B2B companies. In this post, I'll discuss the content aspect of marketing's sales enablement responsibility. My next post will cover the information component.

Sales Enablement Content Needs Improvement

Recent research by Richardson, a sales training firm, paints a mixed picture of marketing's performance on the sales enablement content front. The Richardson research consisted of a survey of over 400 sales representatives and sales managers. Here are a few of the significant findings.
  • 54% of sales reps and 65% of sales managers say they understand their company's content marketing strategy.
  • 65% of sales reps and 74% of sales managers say that the content their company publishes is valuable to their customers.
  • Only 52% of sales reps and 43% of managers say that the content their company publishes helps improve sales effectiveness.
  • When asked how their company's content could be improved to better support sales efforts, 59% of sales reps and 57% of managers said "improve content relevance to our customers." Fifty-one percent of sales reps and 65% of managers said "create a stronger link between the content and the solutions we sell."
Two Flavors of Sales Enablement Content

There are two basic types of sales enablement content. The first consists of "normal" marketing content resources that are distributed to prospects directly by sales reps. Marketing is responsible for developing content resources for all buyer personas for all stages of the buying process. This will necessarily include those stages that occur after marketing has passed a lead over to sales.

These later-stage resources are designed for prospects who are actively considering a purchase. To borrow the terminology used by SiriusDecisions, these are prospects who are "exploring possible solutions," "committing to a solution," and "justifying the decision." When late-stage marketing content resources are distributed by sales reps, they become sales enablement content.

The second category of sales enablement content consists of various "tools" that are specifically designed for use by salespeople. This category includes, but is not limited to:
  • E-mail message templates
  • Sales presentation slides (with accompanying scripts or notes)
  • ROI calculators
  • Total cost of ownership calculators
  • Sales proposal templates
While I contend that marketing should take the lead in creating these kinds of content resources, marketers need to involve sales reps at every stage of the development process, and they need to pay close attention to the "real-world" intelligence and insights that sales reps can bring to the process. Getting salespeople to buy into these resources is critical because they will have no value if they aren't used.

In my next post, I'll discuss the kinds of information that marketing should provide to salespeople as part of the lead hand-off process.

Read Part 1 of the sales enablement series here.

Read Part 3 of the sales enablement series here.

Sunday, June 2, 2013

Why Sales Enablement Matters More than Ever - Sales Enablement, Part 1

In most B2B companies, your success as a marketer depends to a significant extent on your ability to help the sales team sell. By no means is this a new development. For decades, many (perhaps most) B2B companies have been "sales driven," and the primary role of marketing in these organizations was to support the selling effort by creating collateral materials, managing trade show participation, and running occasional brand building and lead generation programs.

Today, marketing is playing a broader and more significant role in the demand generation process in many B2B companies. In particular, marketers are taking greater responsibility for nurturing potential buyers before passing those leads over to sales.

Notwithstanding all of the changes, sales is still a critical part of the demand generation process, and improving sales effectiveness is still an important business objective. If anything, the increased power and heightened expectations of business buyers are driving greater interest in the topic of sales enablement. For example, Forrester Research held its third annual sales enablement conference earlier this year, and other national research/analyst/consulting firms, including IDC, Gartner, and SiriusDecisions are also focusing on this topic.

In my next two posts, I'll discuss the two most important ways that marketing can support and enable the sales team. First, however, a little background information.

What is Sales Enablement?

Both Forrester and IDC have published "formal" definitions of sales enablement.

Forrester's definition:  Sales enablement is a strategic, ongoing process that equips all client-facing employees with the ability to consistently and systematically have a valuable conversation with the right set of customer stakeholders at each stage of the customer's problem-solving life cycle to optimize the return of investment of the selling system.

IDC's definition:  Getting the right information into the hands of the right sellers at the right time and place, and in the right format, to move a sales opportunity forward.

These definitions are very broad because both Forrester and IDC view sales enablement as a strategic business function. Under these definitions, for example, sales enablement would probably include sales training, sales process management, and technology solutions, and sales enablement would extend to all "client-facing" employees, not just salespeople. I don't disagree with this approach, but in my upcoming posts, I'll focus specifically on how marketing can help sales reps sell more effectively.

Why is Sales Enablement Important?

Sales enablement is important for three very simple reasons:
  • Sales enablement is expensive - According to Forrester, companies on average are spending about $135,000 per year per sales rep on sales support people, activities, and processes.
  • The selling process in most companies needs improvement - In research by IDC, 26% of business buyers said their sales reps were unprepared for the initial sales meeting, and 31% of buyers described the sales reps as somewhat prepared. Only 43% of buyers rated their sales reps as very or extremely prepared for the initial meeting. A recent Forrester survey found that only 15% of executives say that their meetings with sales reps meet expectations.
  • Poor sales enablement is costly - According to IDC, a lack of good sales enablement results in $14 million of wasted sales and marketing expenses and $100 million in lost sales opportunities in a "typical" $1 billion company.
In my next post, I'll explain how marketers can support the sales team by developing the right kind of sales enablement content.

Read Part 2 of the sales enablement series here.

Read Part 3 of the sales enablement series here.