Sunday, December 30, 2018

Our Most Popular Posts of 2018

This will be my last post of 2018, and I want to thank everyone who has spent some of his or her valuable time reading this blog. My goal for this blog has always been to provide content that readers will find to be informative, thought-provoking, and useful, and I've been immensely gratified by the attention and engagement this blog has received.

For the past few years, I've used my last post of the year to share which posts have been most widely read. Like last year, I'm only considering posts that were published in 2018. I've ranked the posts based on cumulative total reads, and therefore posts published early in the year have an advantage.

So, in case you missed any of them, here are our five most popular posts for 2018:
  1. Why Brand Building Still Matters in B2B
  2. Six Questions You Must Answer to Create Compelling Value Propositions
  3. How Marketers Can Nurture Buyer Trust, and Why That Matters
  4. Use the 70-20-10 Formula for Better B2B Marketing
  5. New Insights from The CMO Survey on Major Marketing Trends
Happy New Year, everyone!

Image courtesy of Republic of Korea via Flickr CC.

Sunday, December 16, 2018

Research Demonstrates the Financial Impact of Trust

Astute business leaders have long recognized that trust is a vital element of competitive success. But traditionally, trust has been viewed as a "soft" issue - one of those things we know is important, but find difficult to measure. New research by Accenture Strategy quantifies the impact of trust on both revenue and earnings.

So far this year, I've published seven posts here that have addressed some aspect of trust. I've devoted this must attention to trust because it has a significant impact on virtually all aspects of marketing. Trust lies at the heart of all business relationships, and back in January, I argued that widespread buyer skepticism of vendor-provided information was one of those elephant-in-the-room issues for B2B marketers.

Lack of trust produces a major drag on marketing performance. If buyers don't trust what you say, they won't give you credit for understanding their needs, or for providing relevant, personalized, and engaging content and experiences. It's no coincidence that most companies aspire to be seen as a "trusted advisor" by their customers and prospects.

Most business leaders instinctively understand that earning and maintaining the trust of existing and potential customers is essential for success. But because trust is intangible, its economic and financial impacts are difficult to measure and quantify. A recent analysis by Accenture Strategy has now established a clear and measurable link between trust and both revenue and earnings.

The Accenture Strategy "Competitive Agility Index" is a measure of a company's competitiveness that is based on three equally-weighted components:

  • Growth - Year-over-year enterprise value growth and revenue growth
  • Profitability - Multi-year views of return on invested capital, net debt, and EBITDA margin
  • Sustainability and Trust - A quantitative view of environmental, social, and governance factors, including the United Nations Global Compact principles, and a proprietary measure of trust based on publicly available data
In this research, Accenture Strategy used more than four million data points to calculate index scores for over 7,000 companies operating in 127 discrete industries. The index is designed to measure overall competitive agility, not specifically the impact of trust. But Accenture found that trust factors had a disproportionate effect on the overall index score - and on both revenue and earnings (EBITDA).
The Accenture analysis also makes the importance of trust abundantly clear. The authors of the study report wrote:  "Our 2018 analysis revealed that more than half (54 percent) of the companies we examined experienced a material drop in trust at some point during the past two and a half years. . . Across the 54 percent of companies in our sample that experienced a drop in trust, revenues at stake conservatively equate to at least US$180 billion, based on available data."
Based on this analysis, Accenture Strategy argues that companies must make trust a strategic priority. The study report states:  "Your leadership team must embrace trust as a core element of business strategy. All teams - at every level - must walk the talk. The choices they make every day need to support trust as a key element of their corporate business strategy."
The analysis by Accenture provides compelling evidence that trust has a significant impact on corporate financial performance. Therefore, it's important for marketers to make enhancing trustworthiness a key objective for all of their programs.

Illustration courtesy of chuks mbata via Flickr CC.

Sunday, December 9, 2018

The Unfinished Business of Sales-Marketing Alignment

Since launching this blog in 2010, I've written about various aspects of sales-marketing alignment 26 times. And I certainly wasn't the first person to address this topic. For more than a decade, most B2B marketing and sales professionals have recognized the need to forge a more productive relationship between marketing and sales, and many B2B companies have been working on sales-marketing alignment for several years.

Yet, sales-marketing alignment remains a hot topic and an ongoing challenge for marketing and sales leaders. Yesterday, I performed a Google search using the term "sales and marketing alignment." My search produced 320,000 results. When I limited the search to the previous year, Google still returned 22 pages of results.

So, as we near the end of 2018, it seems appropriate to ask how much progress has been made toward achieving effective sales-marketing alignment.

Given the continuing interest, it shouldn't be surprising that several research studies performed in 2018 address the topic of sales-marketing alignment. The research indicates that some companies have made meaningful progress in improving the quality of the marketing-sales relationship.

Earlier this year, for example, InsideView published The State of Sales & Marketing Alignment in 2018, which was based on a survey of more than 500 sales and marketing professionals. In this survey, 75% of marketing respondents, and 68% of sales respondents reported having a good or excellent relationship with their counterparts.

Overall, however, the 2018 research shows that many companies still have work to do to turn their marketing and sales organizations into a cohesive, high-performing demand generation team.

In the InsideView survey discussed above, respondents rated their sales-marketing relationship as weak or very weak on several important demand generation activities, including:

  • Defining and executing field programs;
  • Sharing knowledge about customer buying processes; and
  • Reporting results of joint activity.
In the 2018 State of Pipeline Marketing study by Bizible (and other firms), only 31.2% of survey respondents characterized the sales-marketing relationship in their company as aligned. Another 56.1% of respondents described their sales and marketing teams as being somewhat aligned.
In the 2019 Data-Driven Marketing & Advertising Outlook study conducted by Adweek Branded on behalf of Dun & Bradstreet, only 25% of surveyed B2B marketers said they and their sales counterparts share a full definition of who constitutes a qualified lead. Another 56% of the survey respondents said they and sales have agreed on a limited definition of a qualified lead, but they have no formal documentation of that definition in place.
The growing use of account-based marketing has elevated the importance of - and focused more attention on - building and sustaining a collaborative relationship between sales and marketing. But in the 2018 ABM Benchmark Survey by Demand Gen Report, respondents identified sales and marketing alignment as their second biggest ABM-related challenge (39% of respondents), trailing only proving ROI/attribution (40% of respondents).

Where Do We Stand?

So, where do we really stand with sales-marketing alignment as 2018 draws to a close? Many of the current "best practices" for improving sales-marketing alignment focus on two primary objectives:
  1. Creating a shared understanding among marketing and sales team members regarding the key elements of the company's go-to-market strategy, including the definition of the target market, core value propositions, and customer buying processes; and
  2. Establishing an agreed-upon lead management process (lead stage definitions, lead scoring criteria, etc.).
These objectives are important, but they aren't sufficient to create the level of alignment - or, more accurately, operational integration - that's required for high-performing demand generation in today's business environment.
Over three years ago, Scott Brinker described the situation eloquently when he wrote that the conventional methods for improving sales-marketing alignment weren't "so much a breakthrough in alignment as much as a negotiated peace settlement between two separate countries who share a common border. Trade policy and border control were established, facilitating commerce between them, but they were not one nation under a common flag."

What's Needed in 2019?

To take sales-marketing alignment to the next level in 2019, marketing and sales leaders need to focus on two additional objectives:
Recognized Interdependence - Effective sales-marketing alignment requires a widespread recognition by members of the marketing and sales teams that they need each other, and that an integrated approach to demand generation is essential for success. Therefore, marketing and sales leaders must constantly communicate and reinforce the importance of having marketing and sales work together seamlessly and function as a cohesive team.
Ongoing Collaboration - Effective alignment also requires marketing and sales to work collaboratively on an ongoing basis, and collaboration needs to occur naturally and spontaneously, whenever and wherever it's needed. Therefore, marketing and sales leaders must constantly communicate that informal, self-directed collaboration among marketing and sales team members is not only acceptable, but expected.

Image courtesy of m01229 via Flickr CC.

Sunday, December 2, 2018

The Most Critical Skill for Tomorrow's CMO

A recent article at the Harvard Business Review website argues that many chief marketing officers are at a career crossroads and face four possible futures, some more attractive than others.

The authors contend that customer expectations have risen to exceptionally high levels, and that meeting those expectations requires companies to achieve an unprecedented level of coordination across the business. Many CEOs have responded to this need by creating new C-level roles with responsibilities that span traditional business functions.

These new roles come in several "flavors" with titles such as chief revenue officer, chief growth officer, chief customer officer, or chief digital officer. The growing use of these new senior leadership positions obviously raises questions about the future role of the CMO.

Not surprisingly, the article's authors describe four possible "pathways" for today's chief marketing officers:

  1. Up - The CMO is promoted into a new role and given broader responsibilities for leading growth and customer experience functions.
  2. Over - The CMO keeps the same title, but his or her role is expanded to encompass new growth and customer experience responsibilities.
  3. Down - The CMO's role and responsibilities are downgraded, and the "head of marketing" may no longer be a member of the senior executive team.
  4. Out - The CMO leaves the company, either voluntarily or involuntarily.
If CMOs (or other top marketing executives regardless of title) want to move up or over instead of down or out, they need to demonstrate a new set of skills and capabilities. And there's no shortage of advice regarding what those skills and capabilities should be. Dozens of recent articles have weighed in on the skills and capabilities that the "modern chief marketing officer" should possess.
An article published earlier this year in the Deloitte Review provides an outstanding analysis of how the CMO role needs to change and offers concrete suggestions for how CMOs can earn the trust and confidence of CEOs and other members of the senior management team. The article is based in part on research jointly conducted by Deloitte and the CMO Council.
The Deloitte/CMO Council research revealed that the three most important drivers of CMO success are:
  • Knowing how to use customer data and analytics
  • Having an enterprise-wide business mind-set
  • Being the voice of the customer at the leadership table
In the Deloitte article, the authors recommend that CMOs should begin redefining their role by focusing on three key behaviors.
Relentlessly pursue customer expertise - Marketing is uniquely positioned to be the voice of the customer, and CMOs should constantly strive to improve their understanding of customers and demonstrate their customer expertise to other senior leaders. CMOs need to leverage data-driven insights to understand the whole customer journey, including those parts that don't directly involve the marketing function. They also need to build partnerships with other organizational leaders to deliver better end-to-end customer experiences and support the achievement of other strategic business objectives.
Make marketing make sense - CMOs should "speak the language" of other senior leaders and be ready to translate marketing concepts into terms that align with the objectives of those leaders. In other words, the CMO's goal should be to explain how marketing activities and programs will help other senior leaders achieve their objectives. Obviously, this will often require the CMO to quantitatively connect marketing initiatives with financial outcomes.
Establish a "center-brain" mentality - CMOs must balance the "right-brain" creative aspects of marketing with the "left-brain" analytical/data-driven aspects of marketing. Going forward, successful marketing will demand both strong analytics and inspired creativity.
The need for CMOs to acquire and demonstrate new skills and capabilities is also being driven by broader business management issues. Another recent article at the Harvard Business Review website observed that the average size of the senior executive team at large firms has ballooned in recent years. 
Although these larger teams provide some benefits, they also come with downsides. For one thing, many CEOs increasingly find themselves refereeing conflicts between senior executives. And even when outright conflicts do not erupt, there is a danger that each C-level executive will bring an overly narrow perspective about how to achieve enterprise-wide business objectives.
What CEOs really need are senior leaders who combine a broad and deep understanding of the business, functional expertise, and perhaps most importantly, sound business judgement. So the most desirable skill for "tomorrow's CMO" to demonstrate is the ability to understand how the business works economically and competitively, and how the marketing function can effectively support and advance the company's strategic agenda.

Image courtesy of cykocurt via Flickr CC.

Sunday, November 25, 2018

What Distinguishes Top-Performing Marketing Organizations

A recent survey by B2B Marketing and The Mx Group identified several differences between top-performing and poorly-performing B2B marketers. Not surprisingly, the research revealed that the best-performing marketing organizations excel at maintaining accurate data and integrating data systems, fully leveraging technology, and closely aligning with sales.

This survey included respondents working in a range of industries, with technology (27%), professional services (16%), and industrial/manufacturing/engineering (13%) being the largest segments represented. Eighty-eight percent of the respondents were located in the U.S. or the U.K., and 83% were CEOs, CMOs/VPs of marketing, directors of marketing, marketing managers, or marketing executives.

To identify the distinguishing attributes and behaviors of top-performing marketers, B2B Marketing and The Mx Group polled survey participants about ten factors that affect marketing performance. Top performers (17% of all survey participants) were respondents who rated themselves as successful or very successful across all survey questions. Poor performers (14% of all survey participants) were respondents who rated themselves as unsuccessful across all survey questions.

The following table lists the ten marketing performance factors that this research addressed. The table also shows the percentages of top performers and poor performers for each factor and the percentage point difference between top-performing and poorly-performing respondents. As the table shows, there is a gap of more than thirty percentage points between top performers and poor performers for seven of the ten marketing performance factors.

The data from this survey is interesting, but with a few exceptions, the reported findings leave a significant "hole in the middle." As noted earlier, top performers included only those respondents who rated themselves as successful or very successful on all ten performance factors, while poor performers were respondents who rated themselves as unsuccessful on all of the factors. Together, the top performers and the poor performers account for only 31% of the total survey respondents. So, 69% of the respondents fell somewhere in the middle, and the survey report provides little data about the attributes of those respondents.

It does, however, include overall response data regarding two important issues. First, only 31% of all survey respondents said they have fully deployed their marketing automation system. I would have expected this percentage to be higher by now, given that B2B marketing automation is a relatively mature technology category.

But other recent research has produced similar results. For example, in the 2019 Data-Driven Marketing & Advertising Outlook study conducted by Adweek Branded on behalf of Dun & Bradstreet, only 26% of surveyed B2B marketers said they use the "advanced functions" of their marketing automation platform. Another 31% of the survey respondents said they only use the "basic functions" of their marketing automation system.

The other somewhat surprising finding in the B2B Marketing/Mx Group survey relates to marketing-sales alignment. The survey report states that most of the surveyed marketers claim success at aligning with sales. However, specific survey findings raise some doubt about the accuracy of this perception.

Only 25% of all survey respondents said they and their sales counterparts share a "full definition" of who constitutes a qualified lead. Another 56% of the respondents said they and sales have agreed on a "limited definition" of a qualified lead, but they have no formal documentation of that definition in place.

This finding is particularly concerning, given the undeniable need to have sales and marketing teams work collaboratively to maximize profitable growth. Obviously, effective marketing-sales alignment requires much more than a shared definition of a qualified lead, but that is one of the essential building blocks.

It's increasingly difficult to understand why marketing-sales alignment is still such a seemingly difficult challenge for many B2B companies. The need for better alignment and closer collaboration between the two functions is clear and unambiguous. And one thing is certain. In today's B2B demand generation environment, the lack of effective alignment and meaningful collaboration between marketing and sales is both intolerable and inexcusable.

Top image courtesy of Ron Cogswell via Flickr CC.

Sunday, November 18, 2018

Where Account-Based Marketing Stands in 2018

Account-based marketing was one of the most significant trends in B2B marketing in 2018. It has been the primary focus of numerous conferences and webinars, and the subject of dozens of articles and blog posts. ABM was also addressed in several research studies during 2018, and with less than two  months remaining in the year, I think it's appropriate to look at where ABM stands, as revealed by the 2018 research findings.

ABM Adoption

With a few exceptions, the research findings show that ABM has been adopted by a majority of B2B companies. For example:

ABM Maturity
The research also shows that most companies are still in the early stages of using ABM. For example:
  • In the 2018 ABM Benchmark Study by ITSMA and the ABM Leadership Alliance, 84% of survey respondents said they have been using ABM for two years or less. Fifty-four percent said less than one year.
  • Fifty-two percent of survey respondents reported using ABM for one year or less. (Demand Gen Report ABM Benchmark Survey)
  • Forty-five percent of survey respondents said they had "just started" their ABM program. (Engagio ABM Outlook Survey)
ROI from ABM
The 2018 research revealed a widespread perception that ABM produces a better return on investment than other approaches to marketing. For example:
  • Forty-five percent of survey respondents said the ROI from their ABM program is more than double the ROI from other marketing efforts. (ITSMA ABM Benchmark Study)
  • In the Account-Based Marketing ROI Research Report by Lenati, 44% of survey respondents described the ROI from ABM (compared to other marketing initiatives) as "much higher," and another 37% said the ROI from ABM is "somewhat higher."
ABM and Traditional Demand Generation
Most companies appear to be using a combination of ABM and "traditional" demand generation marketing.
  • Fifty-five percent of survey respondents said they use a mix of both ABM and traditional demand generation. (Engagio ABM Outlook Survey)
  • Sixty-four percent of survey respondents said that between 25% and 75% of their total marketing is ABM. (Bizible State of Pipeline Marketing survey)
ABM Budgets
The 2018 research reveals that companies are committing significant financial resources to their ABM efforts. For example:
  • Survey respondents reported that approximately 28% of their total marketing budget is or will be devoted to ABM. (Mean) (ITSMA ABM Benchmark Study)
  • Survey respondents said that 29% of their total marketing budget would be dedicated to ABM in 2018. (Average) (Engagio ABM Outlook Survey)
Emerging Trends in 2018
One of the emerging trends in ABM this year appears to be that a growing number of companies are implementing more than one "variety" of account-based marketing. Most ABM thought leaders and experienced practitioners recognize three types of ABM - one-to-one, one-to-few, and one-to-many. In the ITSMA/ABM Leadership Alliance 2018 ABM Benchmark Study, 46% of the survey respondents reported using more than one type of ABM, up from 35% in the 2017 edition of the study.
In addition, this research found that one-to-few ABM has become the most popular type of ABM. In the 2018 study, 60% of the survey respondents reported using one-to-few ABM, compared to 56% using one-to-one ABM, and 52% using one-to-many ABM.

How Will ABM Evolve in 2019?

Earlier this year, Gartner argued that the term "content marketing" will soon become obsolete. I believe something similar may happen with account-based marketing, although the process isn't likely to be completed next year.

More specifically, I think the lines between one-to-few/one-to-many ABM and "traditional" demand generation will continue to blur, and that these forms of ABM will become just "the way marketing is done" by many B2B companies. The exception - if there is one - will be companies that focus on very broad markets (such as, for example, SMBs or a combination of SMBs and consumers).

I would also suggest that one-to-one ABM will be assimilated into the larger practice of strategic account management, and that ABM marketers will function as members of account management teams that also include representatives from sales, business development, and customer success/customer service.

Image courtesy of Richard Matthews via Flickr CC.

Monday, November 12, 2018

Why Buying Scenarios Should Be Part of Your Planning for 2019

The stereotypical image we have of B2B buying is that it involves expensive and/or complex products or services, large buying groups, and long buying cycles. But in reality, many B2B companies derive substantial revenue and profit from other types of sales. That's why defining relevant buying scenarios should be an integral part of your go-to-market planning.

Most of the B2B demand generation research and other literature that's been published over the past few years has focused on "high consideration" purchases that involve multiple decision makers, complex decision-making processes, and long buying cycles.

For example, in the 2018 B2B Buyers Survey by Demand Gen Report, 79% of the respondents said that between one and six people are involved in their purchase process, and another 13% said that the process involves between seven and nine people. Sixty-one percent of the respondents said that the length of their buying cycle had increased compared with a year earlier. And during the recent Gartner Sales and Marketing Conference, CEB said that the average size of the B2B buying group had increased to 6.8 people, up from 5.4 people in its earlier research.

But high consideration purchases with large buying groups and long buying cycles have never represented all B2B buying. In fact, many B2B purchases are fairly routine, where the buying decision is made quickly by a small group of people, or even by a single individual. In a 2018 survey of 114 "industrial buyers" by Thomas, 56% of the respondents said they make buying decisions in less than one month, and another 29% said their typical buying process is between one and three months.

While we don't have much recent data regarding the distribution of B2B purchases across various types of buying situations, it's likely that substantial dollars are associated with buying scenarios other than the high consideration stereotype.

In an important survey of more than 3,000 B2B buyers conducted in 2009 by Enquiro and discussed by Gord Hotchkiss in The Buyersphere Project, survey respondents estimated that 50% of their budget was spent on "Repeat" purchases. In this research, Repeat purchases were defined as low risk purchases that are made frequently and involve only minimal changes from purchase to purchase.

The important point here is that most B2B companies derive at least some revenue from multiple types of purchases, and many companies derive significant revenue from more than one buying scenario. It's equally important to recognize that different buying scenarios require different go-to-market and demand generation strategies to achieve maximum success. Therefore, defining relevant buying scenarios and mapping revenue to those scenarios should be an integral part of your go-to-market planning.

What is a Buying Scenario?

A buying scenario is a description of a buying process that includes two major components - the functional attributes of the process itself, and the factors that describe the context of the decision-making process. The diagram at the beginning of this post depicts the buying scenario model that I've been using for several years:

The functional attributes of the buying process are shown on the right side of the diagram. These attributes include the size and composition of the buying group, and the length of the buying cycle. One attribute that often receives too little attention is what I call "Relative influence of individual buying group members." It's not that uncommon to identify a buying scenario in which the "official" buying group includes three or four people, but the buying decision is actually driven by one member of the group.

The items on the left side of the diagram describe the context in which a buying process is conducted. The common denominator across all these factors is that they are designed to capture the level of risk that buyers associate with a purchase decision. As the level of perceived risk increases, most buyers take steps to mitigate the risk, and those steps largely dictate the functional attributes of the buying process that's used. So for example, the buying process used for an expensive product or service, or for a purchase that will require a significant amount of change in the buyer's organization will usually involve more decision makers, include more research activities, and take longer to finish.

Buying scenarios can vary in significant ways, and those variations call for different go-to-market strategies and different demand generation tactics. Therefore, it's important for marketing and sales leaders to identify the buying scenarios their company is encountering, and use that information to craft appropriate demand generation programs.

Sunday, November 4, 2018

Focus on Impact - Not ROI - for Better Marketing Measurement

Demand Gen Report's 2018 Marketing Measurement and Attribution Benchmark Survey makes one point abundantly clear:  Measuring marketing performance is both a top priority and an ongoing challenge for most B2B marketers. Eighty-seven percent of the respondents said that measuring marketing performance is a growing priority for their company, but more than half (54%) also said their ability to measure and analyze marketing performance "needs improvement" or is "poor/inadequate."

The Demand Gen research also revealed that the two most widely-shared motivations for improving measurement capabilities are:

  • The desire to show marketing's impact on pipeline and revenue (70% of survey respondents)
  • The push to show ROI from all marketing investments (67%)
Both of these objectives require the use of financial metrics, and for years, the gold standard for measuring the financial performance of marketing has been return on investment (ROI). However, measuring the ROI of marketing accurately can be quite challenging.The heart of the challenge is attribution, which is the process of assigning both revenue and costs to marketing programs. It's simply not possible to calculate marketing ROI accurately unless you can accurately attribute revenue and costs.
Assigning costs to marketing activities and programs isn't always easy, but it can be done accurately using principles of activity-based costing. Revenue attribution is more difficult to do accurately because of the number of variables that must be considered and the volume of data that's required.
The two most robust methods for attributing revenue to marketing and advertising programs are marketing mix modeling (MMM) and multi-touch attribution (MTA).
Marketing Mix Modeling
Marketing mix modeling involves the application of advanced statistical techniques to estimate the impact of marketing and advertising programs on incremental sales. Marketing mix models are based on several months of historical data about sales and about marketing/advertising spending across both digital and offline channels. The models also typically incorporate factors such as weather, competitive activity, seasonality, and economic conditions.
MMM is a "top-down" approach. These models do not evaluate the actions of individual prospects or customers. Because MMM is backward-looking and doesn't consider the behavior of individual prospects and customers, it doesn't provide the timeliness or level of granularity that is required to support tactical marketing decisions.
Multi-Touch Attribution
Unlike marketing mix modeling, MTA is a "bottom-up" approach that involves the analysis of data about the behaviors of individual prospects and customers. Most MTA solutions focus on digital marketing activities, and therefore they may overstate the revenue impact of online marketing programs. MTA solutions can also produce inaccurate estimates of revenue impact because they don't usually account for a baseline of revenue that would exist without any marketing efforts.
Most robust MTA solutions use advanced statistical techniques and computer algorithms to attribute revenue to marketing activities rather than relying on simplistic, pre-set rules that often produce wildly inaccurate results.
The Best of Both?
Because of the inherent limitations of MMM and MTA, the current state-of-the-art is to use a combination of both methods. But this can raise a significant cost issue. Gartner has recently estimated that companies pay between $100,000 and $250,000 on average per year for an MMM or MTA solution. And the costs can be much higher. Therefore, these solutions will be beyond the reach of many small and mid-size B2B companies.
What to Do? Measure Influence and Impact, not ROI
The marketing measurement space is evolving rapidly, and we may soon have revenue attribution tools that produce more accurate results, and are less complex to use and less costly to acquire. But, what should B2B marketing leaders do in the meantime?
The obvious solution is to use an approach to measurement that avoids or minimizes the need for revenue attribution, while preserving the ability to make sound decisions about the marketing mix and construct a persuasive business case for the value of marketing.
The key is to use a measurement system that captures the influence and/or impact of marketing programs on important business outcomes. In a future post, I'll describe the process for building this kind of measurement model, but here are the four basic steps:
  1. Identify strategic business outcomes
  2. Identify key outcome drivers
  3. Link marketing programs to outcome drivers
  4. Measure program influence/impact on outcome drivers
This methodology will not result in an ROI calculation for individual marketing programs, but given the inherent challenges of revenue attribution, the accuracy of most marketing ROI calculations is questionable at best. This approach will enable marketing leaders to understand the impact of their activities and programs and build a compelling business case for the value of marketing to the business.

Illustration courtesy of Kari Bluff via Flickr CC.

Sunday, October 28, 2018

Do Marketers Have a Clear Picture of Buyer Trust?

Earlier this month, the Content Marketing Institute and MarketingProfs published the findings of their latest B2B content marketing survey. The B2B Content Marketing 2019:  Benchmarks, Budgets, and Trends-North America report presents findings from 771 North American respondents who indicated their company primarily sells to other businesses.

CMI and MarketingProfs made a fairly significant change to their methodology for this survey. This year, they qualified respondents based on whether their company has been using content marketing for at least one year, and whether they are (a) a content marketer, (b) someone who is involved with the content marketing function, and/or (c) someone to whom the content marketing function reports. The qualified respondents represented a wide range of industries and company sizes.

For the past several years, the CMI/MarketingProfs survey report has highlighted important differences between "most successful" and "least successful" content marketers. In the latest survey, the "most successful" marketers include respondents who characterized their company's overall content marketing approach as extremely or very successful, while the "least successful" marketers are those who rated their company's content marketing effort as minimally or not at all successful.

The following table shows some of the important differences between the most successful and least successful content marketers identified in the new survey:

Most of the differences shown in this table have also been seen in earlier versions of the survey. For example, the importance of having a documented content strategy was first identified in the 2014 edition of the survey. So, most of these findings are not particularly surprising.

One of the more interesting findings in the latest survey deals with buyer trust. Ninety-six percent of the most successful marketers agreed that their customers and prospects view their organization as "a credible and trusted resource." Even more surprising, about three out of four (74%) of the least successful marketers also agreed with that statement.

Other recent research has painted a different picture regarding buyer trust. For example, the 2018 B2B Buying Disconnect study by TrustRadius was a survey of 488 individuals who had played a significant role in a business technology purchase within the preceding year. In this research, survey participants were asked to select which sources of information they use during their purchasing process from a list of 15 options.

TrustRadius also asked survey participants to rate the trustworthiness of each information source, and the five least trustworthy sources identified by respondents were:

  • Vendor marketing collateral
  • Vendor blog
  • Vendor-produced case studies
  • Vendor/product website
  • Vendor representative
It's difficult to reconcile these findings with those in the CMI/MarketingProfs survey. It's possible, of course, that the business technology buyers surveyed by TrustRadius are simply more skeptical about vendor information than other B2B buyers. 
It seems more likely, however, that the marketers responding to the CMI/MarketingProfs survey have an overly optimistic opinion about the level of trust they've earned from prospects and customers. Several other recent studies have shown that business buyers tend to view vendor-provided content with a considerable amount of skepticism.
One possible explanation for this apparent disconnect between content marketers and business buyers may relate to how marketers learn about the needs and perceptions of their prospects and  customers. When the marketers surveyed by CMI and MarketingProfs were asked what techniques they use to research their audience, the top three methods identified were:
  1. Sales team feedback (74% of respondents)
  2. Website analytics (73%)
  3. Keyword research (65%)
Only half of the respondents said they use primary research to learn about their target audience, and even fewer (42%) reported using customer conversations or panels. While sales team feedback, website analytics, and keyword research can all produce valuable data for marketers, those techniques won't consistently provide reliable insights about buyer trust.
Trustworthy and credible content is now essential for marketing success. Therefore, it's imperative for marketers to get a regular, objective assessment of the level of trust their content is earning from prospects and customers.

Top image source:  Content Marketing Institute and MarketingProfs

Sunday, October 21, 2018

The Role of Marketing Has Grown, But Maybe Not Enough

Most marketing leaders agree that the role of marketing has grown significantly over the past few years. Much of the recent conversation about the expanding scope of responsibility has focused on marketing's role in managing customer experiences and driving business growth.

Numerous research studies have shown that marketers believe they are (or soon will be) responsible for designing and managing customer experiences. For example, in a 2014 survey of 478 CMOs and other senior marketing executives by The Economist Intelligence Unit, 75% of the survey respondents said that within three to five years, they would be responsible for the end-to-end customer experience.

Growing revenue has always been a primary objective of marketing, but the pressure on marketing leaders to drive revenue growth is increasing. In a 2016 survey of 535 CEOs and 847 CMOs by Accenture Strategy, 50% of the CEOs said their CMO is primarily responsible for driving disruptive growth in their organization. CMOs were ranked ahead of all other C-level executives, including the CEO, the chief strategy officer, and the chief sales officer.

To win a leading role in customer experience and business growth, marketers will need to step beyond the responsibilities that have traditionally been associated with the marketing function. Two recent research studies provide an interesting perspective on how the scope of marketing has, and has not, expanded.

The CMO Survey

The August 2018 edition of The CMO Survey by Duke University's Fuqua School of Business, the American Marketing Association, and Deloitte provides fairly detailed information regarding the current scope of marketing's responsibilities. This survey generated a total of 324 responses from senior marketing leaders in U.S. companies, 66% of whom were affiliated with B2B companies. The detailed survey report makes it possible to isolate the responses from B2B marketers, and the following discussion is based on those responses.

The CMO Survey asked participants to identify the activities or functions that marketing is primarily responsible for in their company. The following table shows the activities that more than 50% of respondents said marketing is primarily responsible for in their organization.

The table below shows the activities or functions that less than 50% of respondents said marketing is primarily responsible for in their company.

These survey findings suggest that marketing's scope of responsibility has not expanded beyond conventional marketing communications functions in most B2B companies. For example, only 38.6% of respondents from B2B product companies, and 48.1% of respondents from B2B services companies said that marketing is primarily responsible for customer experience. And only 35.1% of respondents from B2B product companies, and 32.7% of respondents from B2B services companies indicated that marketing is primarily responsible for revenue growth.

The survey also shows that marketing is not primarily responsible for the development of market entry strategies, new product development, pricing, or innovation in most B2B companies.

Some participants in The CMO Survey may have interpreted the survey question strictly and based their response on whether marketing has primary responsibility for a given activity. If that's true, it's possible that marketing is involved in some of the activities shown in the second table.

The CMO Council/Deloitte Survey

A 2018 survey by the CMO Council and Deloitte provides a more nuanced view of marketing's scope of responsibility. This survey produced 191 responses from marketing leaders, and appears to include both B2B and B2C marketers. In this research, the survey participants were asked to identify their level of involvement in several areas. The following table shows the percentage of respondents who said they were leading, influencing, or not involved in these areas.

The Takeaway

For the past few years, many marketing leaders have argued that marketing is, or soon will be, the principal orchestrator of customer experiences, and that marketing is evolving from "brand storyteller" to "growth driver." These research findings are important because they show that many marketing leaders have more work to do to win a leading role in customer experience and business growth.

The gap is particularly significant when it comes to business growth. Producing sustained revenue growth requires companies to leverage multiple growth drivers, many of which have not been traditionally associated with the marketing function. To successfully lead growth efforts, marketing leaders will need to extend their influence to areas such as market entry strategies, product development, pricing, and innovation.

Top image courtesy of Petr Sejba ( via Flickr CC.

Sunday, October 14, 2018

Why You Need a Chief Revenue Officer in 2019

By now, many B2B companies are already planning for 2019. and part of that planning will involve establishing revenue growth goals for the coming year. Growing revenues has never been easy, but producing consistent revenue growth has become more challenging because of fundamental changes in the B2B competitive environment.

Today's business buyers have more choices, more bargaining power, and higher expectations than ever. And the growing use of "as-a-service" and other subscription-like business models has elevated the importance of long-term customer relationships, while also making them more fragile. Therefore, there's a growing need to provide outstanding experiences at every touchpoint across the entire customer lifecycle.

To address these challenges, a growing number of companies are retooling their leadership structure and adopting new approaches for managing revenue-generating activities. Some B2B companies - particularly technology companies - have created a new C-level position that is usually called the chief revenue officer (CRO).

The specific duties of the chief revenue officer and the scope of his or her authority vary across companies, but the CRO is usually tasked with managing the company's revenue-related business functions, including marketing, sales/business development, direct outside sales, channel management, and customer success/customer service.

A similar approach has been adopted by many B2C companies. Last year, for example, Coca-Cola made news when it chose not to replace its retiring chief marketing officer. Instead, the company created a chief growth officer (CGO) position to manage its marketing, customer, and commerce teams. Culture App, an employee engagement and analytics software firm, recently reported that 455 U.S. companies have chief growth officers, and that number may be higher now.

These organizational moves have been driven by the recognition that the dynamics of revenue growth have changed in fundamental ways. For most B2B companies, the business case for implementing a chief revenue officer or chief growth officer role has become compelling for two reasons.

Growth Originates from Multiple Sources

To optimize revenue growth, business leaders must first identify how growth happens, or more accurately, where it originates. There are several distinct sources or wellsprings of growth. These "structural" sources of growth are not dependent on the way a company is organized or on the types of products or services it sells. Instead, they are based on the strategies and tactics a company can use to exploit each source.

The following diagram shows the four most common structural sources of revenue growth. These sources are always present, and they exist independently of the market conditions facing a company. However, the volume of growth that any particular company can extract from each source is greatly influenced by the company's market and competitive environment.

As a practical matter, no single source is likely to produce enough growth to enable a company to reach its overall growth objective. Therefore, to maximize overall revenue growth, most companies will need to tap all four structural sources of growth.

Growth Demands Cross-Functional Teamwork

Successful revenue growth requires the active participation of multiple business functions, particularly given the need to leverage multiple sources of growth. The following table shows that three or four distinct business functions must be involved to maximize the potential of the four structural sources of growth. And this table is an oversimplification of reality for some companies. For example, companies that derive significant revenue from online sales and/or sales by channel partners would need to add e-commerce operations and/or channel management to the business functions shown in the table.

Successful revenue growth also requires the activities of these business functions to be tightly coordinated, which means that they must work collaboratively on an ongoing basis.

In most B2B companies, the revenue generation process has traditionally involved a series of "hand-offs" from one business function to another. The metaphor often used is a relay race in which each member of the relay team runs for a specified distance and then passes the baton to the next runner.

It's now clear that the relay race approach is no longer an effective way to manage revenue-generating activities. To optimize revenue generation, customer-facing functions must act more like a basketball team than a 4 X 100 meter relay team. All team members are involved throughout the entire game, and their roles change based on the situation.

Enter the CRO/CGO

These circumstances provide a powerful argument for creating a chief revenue officer or chief growth officer role to manage and coordinate all revenue-generating activities. Long ago, the architect Louis Sullivan argued that the shape of a building should be based on its intended use, that "form ever follows function." The same principle applies to business organizations.

Placing all revenue-generating activities under the leadership of a chief revenue officer or chief growth officer enables a company to make the "shape" of its organization reflect the realities of today's revenue generation environment, and constitutes an important step toward optimizing revenue growth.

Top image courtesy of (Creative Commons License).

Sunday, October 7, 2018

Getting Thought Leadership Right in 2019

There's no longer any doubt that thought leadership content is having a major impact on B2B buying decisions. Research studies have confirmed that business buyers are consuming more thought leadership content, and that it affects decisions at every stage of the buying process. Research also shows, however, that business decision makers have become more selective about the thought leadership content they will give their attention to.

Today, thought leadership has become a classic double-edged sword. When it's done well, thought leadership has major positive impact on business buyers. Poor thought leadership, on the other hand, can actually be detrimental. In a recent survey by Edelman and LinkedIn, about a third of C-level respondents said that a company's poor thought leadership content had led them not to do business with the company.

The explosive proliferation of content has made it difficult for marketers to develop content that will cut through the noise. Thought leadership content has the potential to do just that, but only if the content constitutes true thought leadership. Therefore, thought leadership is now of those things that marketers really need to "get right" in 2019.

Unfortunately, the term "thought leadership" is now used so loosely that it's no longer clear to some marketers what real thought leadership is. We do know what business decision makers are looking for in thought leadership content. In a survey by The Economist Group, business executives described compelling thought leadership content as innovative, big picture, transformative, and credible.

The problem is, these adjectives don't identify the specific attributes that make content true thought leadership. And the same can be said for many of the other terms we use to describe content. For example:

  • All real thought leadership content is relevant and insightful, but not all content that is relevant and insightful qualifies as real thought leadership.
  • All real thought leadership content is useful and valuable, but not all content that is useful and valuable qualifies and real thought leadership.
There are two attributes that define true thought leadership and distinguish it from other types of marketing content. When used together, these two attributes provide and effective guide for developing thought leadership content that will cut through the content noise and earn the attention and interest of potential buyers.

Thought Leadership Content is Novel
Real thought leadership content provides information and insights that are genuinely novel. Merriam-Webster defines novel as "new and not resembling something formerly known or used." Therefore, to qualify as thought leadership, content must provide information or insight that adds something new and meaningful to the body of knowledge about a topic. Content that discusses established principles or information can be useful and valuable, but it doesn't constitute true thought leadership.

Thought Leadership Content is Research-Based
Research plays two distinct roles in the development of thought leadership content. First, original research is usually required to capture or develop the new information that makes thought leadership content novel. For example, surveys are often used to capture data that provides the foundation for thought leadership content.
Original research is also critical for thought leadership content because it provides the evidence that makes the content authoritative and persuasive. It's important, of course, for all types of content to be credible, but thought leadership content must meet a higher standard. Because thought leadership content advocates new and novel ideas, it's essential for content developers to support those ideas with sound and thorough research.

Thought Leadership and Third-Party Content
Some B2B companies - particularly technology companies - regularly use content produced by third-party experts in their content marketing program. This often includes content produced by analyst and consulting firms, and by research organizations. Third-party expert content can be a valuable part of your content marketing program because business decision makers tend to view such content as credible. In fact, I've been advocating the use of third-party expert content for more than four years.
It's important to recognize, however, that distributing thought leadership developed by others will not cause your company to be perceived as a thought leader. To earn thought leader status, you will need to create your own thought leadership content. This doesn't mean that you can't work with external research firms and/or content developers to produce thought leadership content. In fact, working with an experienced researcher and/or content developer is the right approach if your company doesn't have internal expertise in these areas. But the finished content should be published under your company's brand.

Image courtesy of Affen Ajlfe ( via Flickr CC.

Sunday, September 30, 2018

How Marketers Are Addressing the Technology Tsunami

Earlier this year, Scott Brinker unveiled the latest version of his now famous marketing technology landscape supergraphic. To no one's surprise, the new graphic showed that the number of marketing technology solutions has continued to grow at a rapid pace.

The 2018 landscape includes 6,829 technology solutions, up 27% from the number in the 2017 version of the graphic. That's a healthy year-over-year growth rate, but the expansion of the marketing technology space is even more dramatic when you consider the growth that's occurred over the past few years. As Scott recently wrote, ". . . the size of the 2018 landscape is equivalent to all of the marketing tech landscapes we assembled from 2011 through 2016 added together."

So how are marketers dealing with this explosion of technologies? The State of Marketing Technology 2018 study by Walker Sands Communications (in partnership with Scott Brinker) provides several interesting insights about this issue. This study consisted of a survey of 300 marketing professionals that was fielded in the first quarter of this year. While this research didn't focus exclusively on B2B, many of the study findings will reflect the views and behaviors of B2B marketers.

Here are some of the important findings from the 2018 survey:

  • Seventy-five percent of the survey respondents said they add new tools to their marketing technology stack at least once a year, and almost half (48%) said they add new tools at least every six months.
  • Seventy-six percent of the respondents said they perform a holistic assessment of their marketing technology stack at least once a year, and over half (52%) said they assess their technology stack at least every six months.
  • Thirty-seven percent of the respondents said their company's use of marketing technology has grown steadily over the past three years, and another 20% said it has evolved rapidly.
  • Sixty-one percent of the respondents described their company's ability to add new solutions to their marketing technology stack as somewhat (46%) or very (15%) agile.
Walker Sands has conducted this study annually for three years, and some of the questions have appeared in all three surveys. So it's possible to see how the attitudes of survey participants have evolved. 

For example, all three surveys asked participants whether their company was investing the right amount in marketing technology, and whether the technology tools in place at their company were up to date and sufficient to help them do their job effectively. The following table shows the responses for 2016, 2017, and 2018:

As the table shows, there was a big uptick in the positive attitudes on these two points in 2017, followed by modest declines in 2018. These declines likely occurred because more marketers have become deeply aware of the critical role that technology plays in marketing. Therefore, they are more sensitive to any perceived shortcomings in their company's technology toolset.

The Walker Sands survey report argues that many companies are failing to keep pace with the evolution of marketing technologies. That's probably true, but I don't believe that a short lag in adoption is necessarily a major problem for most companies.

As I have previously written, marketers need to use a "systems" mindset when evaluating new marketing technologies. They need to determine if a new tool will complement and enhance the overall performance of their existing technology stack. This type of assessment takes a little time, so some lag in adoption is almost inevitable. Marketers just need to be sure they aren't falling too far behind the curve.

Top image courtesy of Grempz via Flickr CC.

Sunday, September 23, 2018

The Differences Between B2B and B2C Marketing That Still Matter

In a recent column published at The Drum, Samuel Scott argued that the marketing industry has split into two distinct camps that have adopted and now advocate two very different approaches to the practice of marketing.

According to Samuel, the divide is between "online B2B marketers" who "want to gain and convert website traffic into leads" and "offline B2C marketers" who "want to build brands among mass audiences." He wrote:  "The result is a new Cold War in which the two sides have different practices, read different publications, attend different conferences, follow different thought leaders, and view the other as outdated or uneducated."

Samuel contends that the big problem with this polarization of marketing is that people in both camps have an incomplete or distorted view of marketing. He wrote:  "Both offline B2C and online B2B marketers can learn from the other's news outlets, conferences, and thought leaders - if only they would choose to do so by openly integrating everything into simply 'marcom.' Today, there is no 'offline marketing' and 'digital marketing.' There is only marketing."

Many of the observations in this column are absolutely on point, but I also think that some of the differences Samuel describes exist for valid business reasons. Recently, it's become popular to downplay the differences between B2B and B2C marketing. Some commentators even argue that all marketing should be viewed as "business-to-human" or "human-to-human."

It's certainly accurate to say that virtually all forms of marketing involve the communication of a message to a human being. It's equally true that business decision makers are also consumers, and that the attitudes and preferences they have as consumers don't disappear when they're acting in a professional capacity. This doesn't mean, however, that there are no important or meaningful differences between B2B and B2C marketing.

Samuel argued in his column that the current divide between B2C and B2B marketing is largely the result of longstanding assumptions, the main one being that "B2C is emotional and has short sales cycles while B2B is logical with long sales cycles." He then correctly points out that this assumption is, at best, an oversimplification of reality.

A more practical and meaningful difference between B2C and B2B marketing is that most B2C marketing involves the communication of a relatively simple message to a large or very large audience, while most B2B marketing requires the communication of more complex messages to a relatively small audience. This difference alone dictates the use of different marketing strategies, channels, and tactics.

The combination of simple message-large audience explains why many B2C marketers still emphasize advertising via offline mass media channels. Short ads (think 30 or 60 seconds) can be effective at communicating simple messages, and mass media channels are still an efficient way to reach large audiences.

And despite assertions to the contrary, several recent research studies have shown that advertising still has a significant impact on consumers. For example, in a 2017 survey of 1,030 U.S. consumers by Clutch, 90% of respondents said that advertisements influence their purchase decisions. The Clutch survey also found that TV is still the most influential medium for advertising. Sixty percent of the respondents said they are likely to make a purchase after seeing or hearing a TV ad.

Since many B2B marketers must communicate more complex messages to a relatively small audience of business decision makers, it shouldn't be surprising that they tend to emphasize the use of marketing channels (such as email) that can be more precisely targeted and marketing techniques (such as content marketing) that can accommodate longer communication formats.

So, is there a "Cold War" in marketing as Samuel Scott suggests? I agree that marketers who work in the various marketing disciplines tend to read many of the same publications, attend many of the same conferences, and follow many of the same thought leaders. To some extent, this kind of "tribalism" is inevitable. But it can also create echo chambers in which the particular and narrow perspectives of each marketing discipline are reinforced and amplified.

To combat the pernicious effects of these echo chambers, marketing leaders need to ensure that the members of their marketing teams are regularly exposed to information about the broader aspects of marketing. Such regular exposure helps reduce the impact of echo chambers and avoid the development of marketing silos.

Image courtesy of Vic via Flickr CC.

Sunday, September 16, 2018

New Insights from The CMO Survey on Major Marketing Trends

With the beginning of the fourth quarter less than a month away, many B2B companies have already started planning for 2019. Over the next several weeks, marketing leaders will be evaluating how well their existing marketing programs have performed and developing plans for the coming year.

To plan effectively for 2019, marketing leaders need a solid understanding for the overall economic and competitive environment and the major trends impacting B2B marketing. The CMO Survey is a valuable resource for information regarding these important issues. The CMO Survey is a joint effort of Duke University's Fuqua School of Business, the American Marketing Association, and Deloitte. The primary objective of the survey is to capture the opinions of senior marketers about important trends in marketing spending and practices.

The August 2018 edition of The CMO Survey generated responses from 324 senior marketing executives at U.S. companies. Two-thirds of the respondents (66.0%) were affiliated with B2B companies. What follows is a brief description of some of the major findings from the latest survey. Unless otherwise indicated, the survey results discussed in this post are based exclusively on the responses of B2B marketers.

View of the Economy

Survey respondents were generally optimistic regarding the health of the U.S. economy. When asked to rate their optimism about the economy on a scale of 0 to 100, the mean of the ratings given by respondents was just over 65. When survey respondents were asked about the level of their optimism compared to the preceding quarter, 35% of the respondents said they were more optimistic, 32% said they were less optimistic, and 33% reported no change.

Note:  Both the Federal Reserve and the Conference Board have recently estimated that real GDP growth in 2019 is likely to be between 2.0% and 2.5%, which most economists would consider good, but not great. So, the level of optimism expressed by the survey respondents seems to be about right.

Drivers of Future Growth

The CMO Survey also asked survey participants to rate the importance of five "drivers" of future organic growth in their business. The following chart shows the percentage of respondents who rated each driver as the most important. As the chart shows, a plurality of respondents ranked having the right talent as the most important driver of future growth.

What is interesting about these responses is that having the right technology received only the fourth highest number of first-place votes (out of five possible choices). So in spite of all the hype that now surrounds marketing technology, it appears that marketing leaders understand that while technology is undeniably important, other factors play an even more significant role in driving growth. In fact, when both first-place and second-place votes are considered, having the right technology still ranks fourth.

Marketing Spending

The CMO Survey found that overall marketing spending increased by about 7% in the 12 months preceding the survey, and that respondents expect marketing spending to grow by about 9% over the 12 months following the survey. Respondents expect spending on digital marketing to increase 13%-14%, while spending on traditional advertising will be essentially unchanged.

The latest survey also shows that marketers expect their spending on social media and mobile marketing to increase rapidly, even though they do not currently see those tactics/channels as having a major impact on company performance.

Respondents from B2B product companies expect social media spending to increase from 9.7% of the marketing budget currently to 18.8% five years from now. Respondents from B2B services companies put the increase at 13.9% of the current marketing budget to 21.6% by 2023. However, 70.9% of respondents from B2B product companies, and 58.5% of respondents from B2B services companies rated the impact of social media on company performance at 3 or less on a 7-point scale.

Mobile marketing shows a similar pattern. Respondents from B2B product companies expect spending on mobile marketing activities to grow from 6.9% of the marketing budget currently to 13.7% in three years. Respondents from B2B services companies put the increase at 7.5% of the current marketing budget to 14.9% by 2021. However, 76.0% of respondents from B2B product companies, and 71.7% of respondents from B2B services companies rated the impact of mobile marketing on company performance at 3 or less on a 7-point scale.

Marketing Analytics

Another aspect of marketing spending that looks similar to social media and mobile marketing is marketing analytics. Survey respondents expect spending on marketing analytics to increase from a little over 6% of the marketing budget today to about 19% of the budget by 2021. It appears, however, that marketers are still challenged to maximize the potential value of analytics.

When survey participants were asked, "In what percent of projects does your company use available or requested marketing analytics before a decision is made?" respondents from B2B product companies reported about 32% of projects, and respondents from B2B services companies said about 29% of projects. In addition, fewer than 20% of respondents reported that the use of analytics made a significant contribution to company performance (a 6 or 7 rating on a 7-point scale). This suggests that being "data-driven" remains more of an aspiration than a reality for many marketers.

Top image courtesy of Marco Verch via Flickr CC.

Sunday, September 9, 2018

Holistic Revenue Management Moves Toward the Mainstream

Fundamental changes in the business environment have led a growing number of B2B companies to adopt new approaches for managing their revenue generating activities. While the specific approaches vary, they all arise from the recognition that successful revenue generation requires a combination of interdependent activities. Therefore, it's important to view such activities as components of a larger revenue generation process that must be managed holistically.

The need for a new approach to managing revenue generation and growth has been driven by the convergence of several competitive forces, including:
  • The growing power and independence of business buyers enabled by an abundance of easily-accessible information
  • The need to provide outstanding customer experiences at every touchpoint across the entire customer lifecycle
  • The emergence of "as-a-service" and other types of subscription-based (or subscription-like) business models
Meanwhile, the leaders of most B2B companies are under persistent and growing pressures to produce organic revenue growth that is consistent, predictable, and sustainable. To meet this challenge, a growing number of B2B companies have changed how they manage the business activities and processes that impact revenue generation.

The Rise of the Chief Revenue Officer
Some companies have responded to the growth challenge by creating a new C-level position - usually called the chief revenue officer - to manage revenue generating activities. The specific duties of the chief revenue officer, and the scope of his or her authority vary across companies, but the CRO is usually tasked with managing most or all of the company's revenue-related functions. 
This would typically include marketing, sales/business development, direct outside sales, channel sales, and customer success/customer service. So, a high-level organizational chart for a typical CRO function would look something like the following:

Until recently, chief revenue officers have largely been a Silicon Valley phenomenon. Most of the early adopters of the CRO role were startup or early-stage SaaS companies. As far as I can tell, there are no reliable estimates of how many (and what kinds of) companies now have a CRO. However, a Google search yesterday - limited to the preceding year - produced about 68,000 results for the term "chief revenue officer." Most of the search results were announcements regarding the hiring of a first-time or new CRO, and most of these announcements were by technology companies.

It appears, therefore, that most CRO's can still be found in technology companies, although it also appears that the use of CRO's is beginning to expand beyond the technology sector.

Revenue Operations Teams
Some B2B companies have sought to address the growth and revenue management challenge by creating revenue operations teams. While this approach is still in its early stages, recent research suggests that the use of revenue operations teams is poised to grow.
Earlier this year, LeanData and Sales Hacker published the findings of The State of Revenue Ops 2018 study. This study consisted of a survey that produced 785 responses. About three out of four of the respondents (73.6%) were sales and marketing professionals, and about 60% were manager-level or higher.
In this study, only 22.4% of the respondents reported having a revenue operations team in their company, but an additional 15.2% said they are currently building one. Most respondents in this survey have a fairly clear picture of what revenue operations encompasses. About 45% defined revenue operations as "a unified alignment of marketing, sales, and customer success," and another 24.3% would add "operations" to the definition.
There was less consensus in the study regarding who should be primarily responsible for revenue operations success. When survey participants were asked who should "own" revenue operations metrics and key performance indicators, respondents provided a range of answers, as the following table shows:

Form Follows Function
The architect Louis Sullivan wrote that "form ever follows function," meaning that the shape of a building should be primarily based on its intended function or purpose. When companies create a chief revenue officer position or a revenue operations team, they are attempting to make the "shape" of their organization reflect the realities of modern revenue generation. Therefore, these approaches represent an important step in the right direction, and the use of both approaches is likely to grow.

Top image courtesy of Chris Potter ( via Flickr CC.