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.