Sunday, October 29, 2017

Why ABM-ers Need to be Proficient at SAM

In an earlier post, I explained why most companies should look first to existing customers when selecting ABM accounts. There are two main reasons for giving priority to existing customers. First, many B2B companies have a small group of customers that produce a large percentage of total revenue and are therefore critical to the company's well-being. These customers merit the special attention that ABM provides. And second, companies have (or should have) rich "intelligence" regarding existing customers that can fuel effective ABM programs.

Account-focused business strategies are not new. Long before anyone had heard of "account-based marketing," astute business leaders recognized the importance of giving special treatment to their most valuable customers. In the late 1950's, larger B2B companies began implementing account management programs to strengthen relationships with their largest customers.

Over the past five-plus decades, the practice of strategic account management (also known as key account management) has grown and matured significantly. Many companies now have well-established account management programs that are led by dedicated key account managers. Several years ago, the Strategic Account Management Association said that about two out of three companies had SAM programs of some kind, and it's highly unlikely that this number has gone down.

When account-based marketing, particularly Strategic ABM, is introduced in a company with an established account management program, the ABM effort must be fully integrated with the existing account management system. A well-conceived account plan for a strategic customer will provide a comprehensive description of the company's strategy for growing its relationship with that customer, and it's important to have a single, unified strategy for each key customer. ABM activities provide the marketing components of the company's account management plan for each strategic customer.

To ensure that marketing activities are tightly integrated with the overall account plan, a marketer needs to be a member of each account management team. In A Practitioner's Guide to Account-Based Marketing, Bev Burgess and Dave Munn highlight this point when they write:  "The most successful ABM-ers are seen as part of the account team:  participating in its meetings, collaborating on the account plan development and execution, sharing the trials and tribulations of service or delivery issues, working flat out on major bids and celebrating success with the team."

If marketers want to be effective members of account teams, they will need to understand the fundamental principles and techniques of strategic account management. Fortunately, there is now a substantial body of knowledge regarding how to do strategic account management successfully, and there are many resources that marketers can use to learn the discipline. Here are two that I've found particularly useful.

The New Successful Large Account Management

The New Successful Large Account Management by Robert B. Miller and Stephen E. Heiman with Tad Tuleja is a revised and updated version of Successful Large Account Management, which was published in 1991. The revised version - published in 2011 - can no longer be called "new," but it describes a methodology for managing strategic accounts that is just as valid today as it was six years ago.

Strategic Account Management Association

The Strategic Account Management Association is a professional association that was formed in 1964 to support and further develop account management principles, practices, and professional skills. The SAMA website contains a wealth of account management resources. Many of the resources are free for SAMA members, and some are also available to non-members at no charge.

Sunday, October 22, 2017

What Sales Needs from Marketing

The business case for marketing-sales alignment has never been more compelling. According to the Aberdeen Group, companies with strong alignment grow revenue at a 64% greater rate than less aligned companies. The relationship between marketing and sales is improving, but it's clear that more work is needed.

Research shows that building a productive relationship between marketing and sales is still a work-in-progress at many companies. Earlier this year, I described some of the major findings of Altify's Business Performance Benchmark Study 2017. This global survey produced 833 responses, and it included respondents from sales, marketing, operations, IT, and customer service.

At first glance, the results of the Altify survey seem fairly positive. Seventy-one percent of the marketing respondents, and 66% of the sales respondents said their sales and marketing organizations "work well together."

However, the survey also revealed the existence of several significant disconnects between sales and marketing. For example, 86% of marketing respondents agreed that "marketing in our company is an effective investment of the company's resources." Only 54% of the sales respondents agreed with that statement, a gap of 32 percentage points.

A recent study by Televerde provides additional insights on the state of sales-marketing alignment from the sales perspective. The What Does Sales Need and Want from Marketing report was based on a survey of more than 200 B2B sales executives.

In this study, 62% of the surveyed sales professionals said that sales and marketing are aligned at their company, and another 18% said the two functions are very aligned. The survey report describes these results in positive terms:  "Survey results show the gap between Sales and Marketing narrowing (finally). The state of sales and marketing alignment isn't as bleak as it was 5 years ago."

The Televerde survey also asked participants about the biggest challenges they face in aligning sales with marketing. The top four responses (from a list of ten choices) were:

  1. Lack of regular communication (37% of respondents)
  2. Differences in the way sales and marketing successes are measured (33%)
  3. The lead qualification process (30%)
  4. Differences in what's important (27%)
One particularly interesting aspect of the Televerde study is that it sought to identify what sales professionals think they need from marketing to be more successful. The survey asked participants what marketing could do to help them win more deals. The following table shows the top five choices selected by respondents:

Televerde also asked study participants what marketing tools, assets, and activities were most useful to sales. The following table shows the respondents' top six choices:

So it does appear that the relationship between sales and marketing is getting better, but the improvement is painstakingly slow in many companies. It's also clear that most companies have more work to do to turn their marketing and sales organizations into a cohesive, high-performing revenue generation team.

Top image courtesy of Tomas Sobek via Flickr CC.

Sunday, October 15, 2017

Look First to Existing Customers When Selecting ABM Accounts

Account-based marketing is often described as an effective way to acquire new customers. And that description is accurate. But ABM is also a powerful tool for growing relationships with existing customers you can't afford to lose.

One reason for the growing popularity of account-based marketing is the widely-held belief that it can dramatically improve the productivity of customer acquisition activities and programs. Most of the content that's currently being produced about ABM emphasizes its use for winning new customers. What often gets lost in this hype is that many companies can realize big benefits by using ABM with (some of) their existing customers.

The importance of existing customers hasn't been lost on many seasoned ABM practitioners.

Why Use ABM With Existing Customers
There's a very practical reason for focusing ABM efforts on existing customers. Most B2B companies have a core group of customers that are critical to the company's well-being. In many companies, 5% of the customers produce 50% or more of the total revenue. In my work with dozens of B2B companies over the past 30 years, I've frequently seen revenue distributions that were even more skewed toward large customers, where 4 or 5 customers accounted for more than 40% of the total revenue.
Account-based marketing is also particularly appropriate for your high-value existing customers because you potentially have several advantages with existing customers that ABM can leverage. Many of these advantages relate to the quality of the "intelligence" that you have regarding existing customers. When you have been working with a customer for a reasonable amount of time, you will have (or should have) rich and detailed information regarding:
  • The specific business needs and challenges the customer is facing
  • The identities, preferences, interests, and concerns of the key stakeholders who influence the relationship between the customer and your company
  • How the key stakeholders currently view their relationship with your company
  • The customer's organizational structure and culture
When used properly, these insights provide the foundation for valuable, relevant, and compelling customer engagement programs. And because most of these insights develop over time as a result of multiple interactions, they effectively constitute "inside" information that "outside" competitors can't easily duplicate.
At a high level, ABM for existing customers and ABM for new customer acquisition are based on the same fundamental principles. But when ABM is used with existing high-value customers, it becomes an integral component of your company's strategic account management program. In a future post, I'll discuss the critical relationship between account-based marketing and strategic account management.

Image courtesy of Kate Ter Haar via Flickr CC.

Sunday, October 8, 2017

How Will You Grow in 2018?

With the fourth quarter of 2017 now underway, many B2B companies have already started their planning for 2018. Over the next several weeks, senior company leaders will be evaluating how their business is currently performing and setting goals for the coming year. Some of those goals will inevitably relate to revenue growth, and one thing is clear:  Marketing leaders are squarely on the growth hotseat.

In a 2016 global survey of CEO's and CMO's by Accenture Strategy, 50% of the CEO's said their CMO is primarily responsible for driving disruptive growth in their organization. About a third of the CEO's also said that the CMO is the first to go when growth targets aren't met.

To set realistic growth objectives for 2018, and to implement marketing programs that will effectively support those objectives, marketing leaders must have a clearly-defined revenue growth strategy. One critical - but often overlooked - step in developing a sound revenue growth strategy is identifying where growth will come from. Specifically, marketing leaders need to answer three basic questions during their planning process:

  1. What are the structural sources of revenue growth in our business?
  2. How much growth is each source currently producing?
  3. How much growth can we realistically expect to generate from each source next year?
I described the most common structural sources of revenue growth in an earlier post, so I won't repeat that discussion here. The following diagram depicts the sources of growth that exist in most companies:

How Much Growth is Each Source Currently Producing?
In this post, I'll discuss how to answer Questions 2 and 3. When I work with clients on business or marketing strategy projects, I use sales data from the client's ERP/accounting system to answer the second question. Here's a simplified example of how the analysis works.
Suppose that your company had total sales of $110 million for the 12 months ending on September 30, 2017. In this example, I'll call this 12-month period "2017." You had total sales of $100 million for the 12 months that ended on September 30, 2016. We'll call this 12-month period "2016." So, your company grew sales by $10 million during 2017.
For this example, let's suppose that your company did not acquire another business or introduce any new types of products in 2017. During 2017, your company did begin selling in a new geographic market. Under these circumstances, your primary sources of revenue growth in 2017 were base retention, increased sales to existing customers, sales to new customers in existing markets, and sales to new customers in new markets.
To quantify how much revenue growth each of these sources produced, you would use "sales by customer" data from your ERP/accounting system.
Base retention (revenue churn) - To measure the impact of revenue churn, identify the customers who bought from you in 2016, but did not buy from you in 2017. The total sales made to these customers in 2016 is the amount of revenue that was "lost" in 2017 due to revenue churn. For this example, let's say the amount of lost revenue was $1 million.
Increased sales to existing customers - Identify the customers who bought from you in both 2017 and 2016, and compare the 2017 total to the 2016 total. For this example, let's say that sales to existing customers increased by $3 million in 2017.
Sales to new customers in existing markets - Identify the customers who  bought from you in 2017 but did not buy from you in 2016. Then eliminate those customers who are based in the geographic market that you entered in 2017. The sales made to the remaining customers are sales to new customers in existing markets. Let's say this source accounted for $5 million of the 2017 revenue growth.
Sales to new customers in new markets - This is the total 2017 sales made to customers in the geographic market that you entered in 2017. Let's say this amount was $3 million.
The table below summarizes the results of this analysis and shows where growth in 2017 came from:

How Much Growth Can We Generate from Each Source in 2018?
Once you know where your current growth came from, you can use these insights to set more realistic and achievable growth objectives for the coming year. The key is to analyze why the current growth happened.
In our hypothetical company, for example, sales to new customers in existing markets produced $5 million, or 50%, of the total sales growth in 2017. One possible explanation for this growth is that the overall market for the company's products or services expanded in 2017. In other words, the growth may have resulted from being in "the right market at the right time." It's also possible that this growth occurred because the company took customers from competitors and increased its market share.
Either way, the important questions is:  How much future growth can the existing markets provide? If the existing markets still have substantial growth potential, the company will probably want to focus a significant amount of demand generation efforts on acquiring more new customers in these existing markets.

On the other hand, if those existing markets do not have significant future growth potential, the company will need a different strategy to drive growth. It may, for example, want to focus more demand generation efforts on acquiring new customers in the geographic market it first entered in 2017, or it may need to consider expanding into new geographic markets.
This type of analysis should be done for each source of revenue that contributed to current growth and for any new sources that are expected to contribute next year. Once this analysis is completed, you should set revenue targets for 2018 for each source of revenue that applies to your company. And once these revenue targets have been established, marketing leaders can begin to design marketing programs to achieve those objectives.

Top image courtesy of via Flickr CC.

Sunday, October 1, 2017

New Research Shows the Evolution of B2B Content Marketing

Last week, the Content Marketing Institute and MarketingProfs published the first report relating to their latest annual content marketing survey. B2B Content Marketing:  2018 Benchmarks, Budgets, and Trends - North America is based on the responses of 870 survey participants who said their company primarily sells B2B products or services. These respondents represented a wide range of industries and company sizes, and most held marketing-related positions.

The CMI/MarketingProfs survey has been conducted annually for several years, and therefore it's possible to see how content marketing attitudes and practices have changed over time. The following table shows some of the major findings from the latest survey and the comparable findings from the 2017 edition of the survey.

In general, these results indicate that content marketing is evolving in fairly predictable ways.

The Commitment to Content Marketing Remains Strong

Fifty-six percent of respondents in the 2018 survey said their company is extremely or very committed to content marketing. This was down from 63% in the 2017 survey, but I don't see this "drop" in commitment as particularly significant. As marketers gain experience with content marketing, their expectations become more realistic, and this can lead them to describe their commitment in a more "tempered" way.

Success with Content Marketing is Improving

In the 2018 survey, 24% of respondents described their company's overall approach to content marketing as extremely or very successful, up from 22% in the 2017 survey. In both surveys, a majority of respondents - 63% in 2018 and 62% in 2017 - said their content marketing efforts are now much more or somewhat more successful than they were a year earlier.

The Practice of Content Marketing is Maturing

In the 2018 edition of the survey, 34% of respondents rated the maturity of their content marketing efforts as sophisticated or mature. This was up from 28% in the 2017 survey. Many companies have been practicing content marketing now for several years, so it's not surprising that a growing number of marketers see their efforts as more mature.

The Continuing Need for Strategy

One of the disappointing findings in the 2018 survey is that only 37% of respondents reported having a documented content strategy. This percentage hasn't changed much for the past several years. It was 37% in 2017, 32% in 2016, and 35% in 2015. The CMI/MarketingProfs surveys have consistently shown that companies with a documented content strategy achieve greater content marketing success. In the 2018 survey, for example, 62% of the respondents who described their organization's content marketing efforts as extremely or very successful reported having a documented content strategy.

Top Image Source:  The Content Marketing Institute and MarketingProfs