B2B Marketers, Be Careful What You Ask For

For the past few years, B2B marketing thought leaders and practitioners have been advocating that marketing should play a larger role in the demand generation process. Proponents of this view argue that marketing should have the primary responsibility for acquiring new sales leads via inbound and outbound marketing programs and for nurturing and qualifying leads until they are ready to begin a meaningful engagement with a sales rep.

According to its advocates, this model of demand generation is more consistent with how today's business buyers learn about issues and possible solutions and make buying decisions, and it also uses a company's demand generation resources more effectively and efficiently.

While the arguments supporting this demand generation model are compelling, implementing it will constitute a major change for many B2B companies. To understand how just big the change is, we only need to look at where leads are coming from today.

The following table is based on the annual Sales Performance Optimization surveys conducted by CSO Insights and includes data from the survey results published in 2011, 2012, and 2013. The survey question asked respondents to specify what percentage of their sales leads are self-generated by sales reps, what percentage are generated by marketing, and what percentage originate from other sources. As the table shows, B2B companies are still relying on salespeople to generate almost half of all new sales leads.



 

The distribution of lead sources shown in the above table has been fairly stable now for several years. The following chart is also based on data from the Sales Performance Optimization surveys and shows the percentage of total leads generated by marketing from 2005 through 2013. As the chart shows, marketing has been producing between 24% and about 30% of total leads for the past seven years.



 

The CSO Insights data makes two important points. First, it clearly shows that B2B marketers will need to "step up their game" if they want marketing to take the lead in lead generation. They must be ready to demonstrate to senior company leaders that they have a strategy that will produce enough sales-ready leads to enable their company to achieve its revenue goals.

 

Perhaps more importantly, the CSO Insights data makes it clear that successful lead generation will require the involvement of both marketing and sales (and other business functions as well), at least for the foreseeable future. Even if marketing significantly increases its lead generation results, it is likely that, for the next few years anyway, between 40% and 50% of leads will still be produced by sales reps and other sources.

Alice, the Red Queen, and Content Marketing

In Lewis Carroll's classic, Through the Looking Glass, the Red Queen takes Alice on a run in a forest. Alice and the Queen run very fast, but they never seem to leave the place where they started. When Alice wonders why, the Queen explains, "Now, here, you see, it takes all the running you can do, to keep in the same place."

I suspect that many marketers today feel like they're running alongside Alice and the Red Queen. The pace of change in marketing has accelerated dramatically over the past few years, and the watchword in marketing today is more - more tactics to use and master, more channels to incorporate in the marketing mix, more demanding prospects and customers, and more marketing content to create and distribute. So even if you're working as hard as possible, you can find yourself just barely keeping up with ever-increasing demands.

The "Red Queen effect" can be found in all aspects of marketing, but it's particularly potent in content marketing. Marketers are now tasked to create more marketing content than ever before, and it's not an easy job. In the B2B Content Marketing:  2013 Benchmarks, Budgets, and Trends - North America study by the Content Marketing Institute and MarketingProfs, producing enough content surpassed producing engaging content as the greatest challenge facing B2B content marketers.

The volume of content that's required to fuel effective marketing programs is growing exponentially for several reasons.

An Increased Need for Relevance

To create engagement with today's potential buyers, marketing content must be relevant to the interests and concerns of individual buyers, and it must be aligned to where the buyer is in his or her decision-making process. In the B2B world, most significant purchases will involve several buyers, and it's often necessary to develop content for each type of buyer. The need to have content for multiple types of buyers for each stage of the buying process multiplies the number of content assets that marketers must create.

The Lifespan of Content is Getting Shorter

The half life of content, particularly social media content, is shorter than ever. For example, the effective lifespan of a tweet or a Facebook or LinkedIn update is measured in hours. This means that marketers must constantly be adding new content to replace what falls off the radar screen.

Frequency Still Matters

The third reason that the need for content is exploding is that frequency indisputably drives increased results. Seth Godin recently wrote a blog post titled The curse of frequency, and he stated the principle very clearly:  "If you promote something twice to one hundred people it will lead to more sales than it you promote it once to two hundred people."

Marketers have long understood the value of frequency for traditional advertising and marketing programs. It now appears that frequency also improves the results you get from "new" marketing channels such as blogs and social media. So, with more marketing channels than ever, you need more content than ever to achieve the desired level of frequency.

Dealing with the Red Queen Effect

So, what can marketers do to combat the Red Queen effect in content marketing? I'm planning to deal with this question in a future post, but here's a sneak preview.

Start by identifying the value propositions that are essential to your company's go-to-market strategy. If you work in a small or mid-size company, you should be able to identify four to eight core value propositions.

Then, develop one or two substantial content resources for each core value proposition. By substantial, I mean longer-form resources such as white papers or e-books.

Finally, use these "base" content resources as the "parents" of multiple other pieces of content. For example, with a little creativity, you should be able to use a white paper as the basis for:

• A full-length webinar or 2 to 3 shorter webcasts
• 2 to 3 articles for online or offline publications
• 3 to 6 posts for your blog
• A dozen or more social media updates (Twitter, LinkedIn, Facebook, etc.)

This approach won't completely eliminate the Red Queen effect, but it will help make it manageable.

Image by:  Playing Futures:  Applied Nomadology (www.flickr.com)

How to Avoid Lead Genocide

Several days ago, I came across a great blog post by Jill Konrath. If you're not familiar with Jill's work, she is a well-respected sales consultant/trainer and the author of SNAP Selling and Selling to Big Companies.

In her post, Jill describes an experience with a provider of CRM software. You can read Jill's post to get the full flavor of the experience, but I'll provide an abbreviated version.

Jill received an e-mail from the CRM provider offering an ebook on the social sales revolution. Jill registered to obtain the ebook because she was interested in the topic. She had zero interest in acquiring a new CRM solution.

Just a few minutes after downloading the ebook, Jill received an e-mail from the CRM provider suggesting a "brief 10 minute call" to answer questions and "explain how our different products and services could bring value. . ." This call would help "shorten your evaluation process" and provide "exactly the information you need to help make any comparisons or decisions."

Exactly 34 minutes after this message, Jill received a second e-mail. The second message indicated that the sales rep had been unable to reach Jill by telephone and asked Jill to "let me know if it makes sense to connect." Two minutes later, Jill received a third e-mail asking her to answer nine questions regarding her CRM environment, including what she wanted her CRM system to do for her business, how many users she would have, and what other solutions she was evaluating.

Jill's post provoked numerous comments, and many of the people who commented said they had experienced something similar. One person said that she called this kind of marketing lead genocide rather than lead generation. I've had several experiences similar to Jill's, and I suspect many of you have also.

Practices like this are the epitome of bad marketing. In some cases, these aggressive practices may be the result of an honest, but mistaken, belief that just because a prospect has downloaded one white paper or ebook or attended one webinar, he or she is actively evaluating a potential purchase and is ready for a sales-level engagement.

More often, though, these kinds of practices result from an erroneous belief by sellers that they can push or drive or advance prospects through the buying process. The reality is, prospects control the buying process, and they determine how quickly they will move through the cycle. As I wrote in an earlier post, the only way you can consistently accelerate the buying process is to eliminate the friction that slows prospects down. Anything else is, at best, wasted effort, and it will usually do more harm than good.

To avoid the kind of marketing malpractice described in Jill's post, resist the urge to treat a prospect's first interaction with your business as an invitation to begin a late-stage sales conversation. And remember that, while you can facilitate your prospects' decision-making process, they ultimately decide when and to what level they will engage with your business.

An Inconvenient Truth About B2B Demand Generation

If you're a B2B marketer, describing the major attributes of your lead-to-revenue funnel and measuring the dynamics of your funnel are critical to understanding how well your demand generation system is performing. Funnel metrics will help provide the answers to three basic questions:

• Volume - Are our marketing programs generating a sufficient number of raw leads (sometimes called responses or inquiries) to produce the revenues that marketing is responsible for?
• Conversion - What percentage of leads are "converting" from each lead stage to the next across the entire lead-to-revenue cycle?
• Velocity - How long is the overall revenue cycle? In other words, now much time does it take, on average, for an initial response or inquiry to result in a closed sale?

Many B2B companies use the Demand Waterfall model developed by SiriusDecisions to describe and measure the lead-to-revenue funnel. The graphic below shows the major stages in the Demand Waterfall and the conversion rates achieved by average B2B companies, according to SiriusDecisions. (Note:  SiriusDecisions recently revised the Demand Waterfall to add several lead stages, but the framework shown below is still widely used by B2B companies.)

Now for the inconvenient truth. Research strongly suggests that the demand generation system in many B2B companies is horribly inefficient. Based on the conversion rates identified by SiriusDecisions, the average B2B company needs to generate 351 inquires to acquire one new customer. That equates to an overall lead-to-revenue conversion rate of only 0.3% (4.4% x 66% x 49% x 20%).

Forrester Research has found similar levels of demand generation performance. According to Forrester, the average overall lead-to-revenue conversion rate is 0.75%. What makes this issue important is that your overall lead-to-revenue conversion rate has a big impact on your company's overall cost of sales, which obviously affects company profitability.

 

The good news is that companies can significantly improve the performance of their lead-to-revenue funnel. In addition to identifying the lead conversion rates achieved by the average B2B company, SiriusDecisions has also studied the conversion rates achieved by Best Practice companies, and their research shows that Best Practice companies perform substantially better across the board. The table below shows how the higher conversion rates achieved by Best Practice companies impact lead-to-revenue funnel performance.

 

 

 

As this table shows, Best Practice companies must generate only about 70 inquiries to acquire one new customer, while average firms need five times as many. Best Practice companies also achieve an overall lead-to-revenue conversion rate of 1.4%, which is about five times higher that the rate achieved by average firms.

The performance of your lead-to-revenue funnel will tell you a great deal about the effectiveness of your marketing and sales efforts. So, if you aren't currently using funnel metrics, now would be a good time to start.