The Customer Retention Disconnect in B2B

Astute business leaders have long recognized the importance and value of building and sustaining strong, positive relationships with existing customers. Customer loyalty programs of various kinds have existed in the United States since the late 1700's.

Interest in customer loyalty grew in the 1990's when Don Peppers and Martha Rogers popularized the importance of understanding customer lifetime value in several highly-regarded books, beginning with The One to One Future. In 1996, Fred Reichheld fueled more interest when he demonstrated that creating loyal customers drives higher profits and shareholder value in The Loyalty Effect.

Over the past few years, customer experience has become one of the hottest topics in the marketing world, and numerous studies have shown that business and marketing leaders understand the strategic importance of providing outstanding experiences to both existing and potential customers.

But despite the long-standing recognition that customer loyalty is important and the current focus on providing great customer experiences, a 2015 study by Demand Metric showed that many B2B companies are still placing too little emphasis on customer retention and growth. This study also revealed that managing customer experiences is a fragmented process in most B2B companies, which may help explain why customer retention and growth receives too little attention.

The Demand Metric Study

Last November, Demand Metric published a report on customer lifecycle marketing that was based on a survey of business, marketing, and sales leaders, most of whom were affiliated with B2B companies. The Demand Metric research found that only a relatively small minority of B2B companies have fully implemented a customer lifecycle approach to marketing.

Only 19% of survey respondents said they are marketing to all stages of the customer lifecycle. Twenty-two percent of respondents said they are marketing to some stages of the lifecycle and plan to begin marketing to all stages, while another 23% said they are considering the adoption of customer lifecycle marketing.

Demand Metric also found that the average company spends about 60% of the marketing budget on new customer acquisition, but only about 30% on customer retention. Since it tends to cost more to acquire new customers than it does to keep existing ones, some disparity in spending is to be expected. However, 55% of survey respondents said that their marketing investment for the retention stage and for the advocacy stage of the customer lifecycle was minimal or none, which indicates that marketing to those lifecycle stages is a low priority.

For this survey, Demand Metric divided the customer lifecycle into five stages - awareness, consideration, purchase, retention, and advocacy - and asked survey participants to identify which of their departments has primary responsibility for managing each stage of the lifecycle. The survey results clearly show that multiple departments share responsibility for managing engagement over a customer's entire lifecycle.

An overwhelming majority of respondents agreed that marketing is primarily responsible for the awareness stage, and that sales is primarily responsible for the purchase stage. Fifty-nine percent of respondents said that marketing is also primarily responsible for the advocacy stage, and 50% gave primary responsibility to marketing for the consideration stage.

However, respondents were almost evenly split when it came to the retention stage of the customer lifecycle. Twenty-nine percent said it belonged to customer support, 26% said marketing, and 26% said sales. This finding suggests that the responsibility for customer retention may not be clearly defined in many companies, which could explain the low level of spending on customer retention marketing.

In B2B companies with "subscription" business models, the economic value of a customer is realized in installments, and customer profitability depends largely on the length of the customer relationship. In these companies, retaining customers is absolutely vital for success. In several other types of B2B companies, most customers make multiple, independent, and relatively small purchases over time. Maintaining strong relationships with existing customers is just as important for these types of companies as it is for subscription-based businesses.

The bottom line is that most B2B companies should be paying  much more attention to strengthening relationships with their existing customers.

Image courtesy of Dave_S. via Flickr CC.

Why Your Content May Be More (or Less) Engaging Than You Think

Measuring the performance of content marketing has become a major issue for marketers over the past few years. As the popularity and use of content marketing have grown, the amount of spending on content marketing has also increased. As a result, a growing number of company leaders are requiring marketers to demonstrate the effectiveness and value of content marketing activities and programs.

Several firms that provide content marketing technologies or services have developed and published frameworks for measuring content marketing performance. Some examples are the frameworks developed by Jay Baer at Convince & Convert, Curata, and Contently.

Overall, these frameworks provide a sound approach to measuring content marketing performance. However, like most measurement systems, they include metrics that have some limitations. So, it's important for marketers to understand what each metric does (and does not) measure and therefore how each metric should (and should not) be used.

B2B content marketing effectiveness is difficult to measure for several reasons. What B2B marketers ultimately want to know is whether (and how much) their content marketing efforts are contributing to revenue generation. But in the B2B world, months or even years can separate a potential buyer's exposure to a content asset and a final buying decision. Few if any B2B marketers can afford to wait that long to find out if their content is effective.

B2B marketers also really need to know whether their content is earning and sustaining meaningful attention from potential buyers because sustained engagement is essential for winning sales. Unfortunately, however, engagement quality can be extremely difficult to measure directly.

To address these and other challenges, marketers often use what are called proxy measures. In the field of measurement science, proxy measurement refers to the act of substituting one measurement for another. The most common use of proxy measurement occurs when a measurement that is relatively inexpensive and easy to perform is substituted for a measurement that is costly, difficult, or even impossible to perform.

It's perfectly acceptable to use proxy measures, so long as the proxy has a strong correlation with the true focus of interest. However, it can be tempting to use an "easy" metric as a proxy for a "difficult" metric even when the correlation is weak or nonexistent.

To illustrate how the inappropriate use of proxy metrics can impact the measurement of content marketing effectiveness, let's consider content sharing metrics. These metrics are designed to capture how many times a piece of content is shared on social networks such as LinkedIn, Twitter, and Facebook. Content sharing contributes to content marketing success by exposing content to individuals who would not otherwise see it, and therefore it amplifies the potential reach of the content.

But some marketers also view content sharing as an indicator of - a proxy for - content engagement. The assumption is that content that is widely shared is also engaging, but that's not necessarily the case. Research by Chartbeat has shown that the correlation between social shares and content engagement is virtually nonexistent. In this research, Chartbeat examined 10,000 socially-shared articles and found that there was no relationship between the number of times an article was shared and the amount of time an average reader gave that article.

The social sharing metrics that most companies use to measure content effectiveness can also lead to inaccurate conclusions because they only capture sharing on "public" social networks. In 2014, research by RadiumOne found that 69% of all content sharing globally takes place via private digital communications tools such as e-mail and instant messaging - what is typically called "dark social" sharing.

The RadiumOne research focused on consumers, but it's likely that private content sharing is even more prevalent among business buyers. When a businessperson privately shares business-related content with his or her work colleagues, the engagement with that content is likely to be very high. Therefore, the typical content sharing metrics are even less effective for measuring content engagement in a B2B setting.

The bottom line is that measuring the true effectiveness of content marketing is difficult, and the use of proxy metrics will sometimes be necessary. But when using proxy metrics, its critical to understand what the limitations of those metrics are.

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The Most Compelling Reason to Use Account-Based Marketing

By now, just about everyone involved in B2B marketing is aware of the hype surrounding account-based marketing (ABM). Many thought leaders argue that ABM is the "next big thing" in B2B marketing, and recent research confirms that the enthusiasm for account-based marketing is strong and growing.

• In the 2015 State of Account Based Marketing Survey by SiriusDecisions, 92% of respondents said that ABM is "extremely" or "very" important to their overall marketing efforts.
• In Demand Metric's 2015 Account-Based Marketing Adoption study, 71% of survey respondents said they are interested in adopting ABM, are testing it, or are already using it.

According to users, account-based marketing provides several important benefits. In the Demand Metric study, the four top benefits identified by ABM users were:

1. Increased engagement with target accounts (83% of users)
2. Better sales/marketing alignment (69%)
3. Better qualified prospects (66%)
4. Greater understanding of program performance (59%)

These benefits are important, but at a more basic level, the most significant potential benefit of ABM is a more productive B2B demand generation system. As Demand Metric wrote, "It [ABM] allows marketing and sales to target the accounts they value most, including prospects, current customers and partners. This precise approach to targeting helps bring the right accounts to the table, making the marketing and sales process more efficient." (Emphasis in original)

There's no doubt that demand generation productivity needs improvement. Several research studies have found that the demand generation system in many B2B companies is horribly inefficient. Specifically, these studies have shown that the overall lead-to-revenue (LTR) conversion rate in the average B2B company is extremely low. And even top-performing B2B companies don't have LTR conversion rates that are all that impressive. The following table shows the results of these research studies.

A well-designed and well-executed ABM program should improve demand generation productivity by significantly increasing a company's LTR conversion rate. In the Demand Metric research, 43% of experienced ABM users said that account-based marketing had a positive impact on all stages of the demand generation funnel.

To illustrate how ABM can impact the LTR conversion rate, take a look at the following table. This table shows the lead stage conversion rates published by SiriusDecisions for average and best-in-class B2B companies. Notice that the lowest rate in both cases is for the conversion from inquiry to marketing qualified lead (MQL).

When a company implements account-based marketing, it targets most of its marketing programs at relevant individuals who are affiliated with specified accounts. Therefore, virtually all of the responses or "inquiries" produced by those programs will, by definition, be marketing qualified leads. As a result, the inquiry to MQL conversion rate will be extremely high.

If an average B2B company increases its inquiry to MQL conversion rate to 80%, its overall LTR conversion rate will increase from 0.29% to 5.3%, even if all of the other intermediate conversion rates remain unchanged. Under the same circumstances, a best-in-class company would improve its LTR conversion rate from 1.42% to 10.2%. These increases represent an 18X improvement in demand generation productivity for an average B2B company and a 7X improvement for a best-in-class company.

For the past several years, thought leaders have argued that B2B marketers should focus more on lead quality and less on lead quantity. This change in focus is a natural consequence of using account-based marketing, and the resulting productivity improvements are impressive.

Top illustration courtesy of Richard Matthews via Flickr CC.

What Really Makes B2B Buyers Loyal to Their Suppliers?

There's no longer any doubt that providing great customer experiences has become essential for competitive success. In 2014, research by Gartner found that 89% of companies expected to compete mostly on the basis of customer experience by 2016. And Walker Information recently wrote that by 2020, customer experience is expected to surpass product and pricing as the key business differentiator.

As marketers, we tend to view customer experience primarily through the lens of marketing communications, and as content marketers, we tend to think of customer experience mostly in terms of providing rich, engaging, personalized, and relevant content to our customers and prospects. It's easy to forget that customer experience is a multi-faceted phenomenon that results from all the interactions that a customer or potential customer has with a company, only some of which involve marketing communications or marketing content.

Recent research by Forrester Consulting provides important insights about what B2B buyers value most in their relationships with suppliers. For this study, Forrester surveyed 1,307 B2B buyers from around the world at organizations with at least 1,000 employees. The overall objective of the study was to explore evolving B2B buyer expectations and demands and the omnichannel practices of B2B sellers. However, my focus in this post is on a finding in the study that reveals what factors are most responsible for making B2B buyers loyal to their suppliers.

Forrester asked survey participants to rank the five most important factors (from seven possible choices) that influenced their willingness to buy again from a supplier. The table below shows the percentage of respondents who included each factor among their top five choices.

As the above table shows, the two most important drivers of loyalty were transparent prices and product details and excellent customer service and post-purchase support. What will probably surprise many marketers is that buyers ranked personalized recommendations (based on prior purchasing habits) and offering omnichannel capabilities last in importance.

When we look at the loyalty drivers that B2B buyers consider to be most important, the rankings change somewhat. The following table shows the percentage of respondents who ranked each factor first or second in importance.

In the above table, personalized recommendations ranks fourth (versus sixth in the overall ranking) and omnichannel capabilities ranks sixth (versus seventh in the overall ranking).

The findings of the Forrester study indicate that for many B2B buyers, loyalty is based on very pragmatic considerations. This doesn't mean that personalized interactions with customers and omnichannel capabilities are unimportant, but it does suggest that they should be viewed as complementary to other drivers of customer loyalty.

Top image courtesy of Flickr CC and One Way Stock.

Effective Sales Enablement Requires More Than Technology

As I wrote in an earlier post, sales enablement was one of the hottest topics among B2B marketing and sales professionals during 2015. The growing interest in sales enablement is evidenced by the amount of research the topic has attracted.

During 2015, several firms conducted research studies regarding sales enablement. Many of these studies were produced by companies that offer sales enablement software, and these studies naturally focus on the benefits provided by sales enablement technology. However, there are some studies that examine sales enablement from a broader perspective, and what is clear from these broader studies is that companies with the most successful programs treat sales enablement as a distinct and multi-faceted business function.

The Power of Enablement:  Bridging the Sales Productivity Gap by Forbes Insights (in association with Brainshark) is based on a survey of 216 top executives in US-based companies. This research identified several key characteristics of companies that excel at sales productivity.

• 59% of top-performing companies have a defined sales enablement role (versus only 30% of under-performing companies).
• Three out of four (74%) of top-performing companies report good alignment between their marketing and sales functions, compared with only half (49%) of other firms. Forbes also found that companies with a defined sales enablement function say they they have better alignment between marketing and sales (61% vs. 42%).
• Top-performing companies recognize the importance of providing sales reps effective coaching and training. When asked how they are investing in skills development to improve sales productivity, 74% of top performers cite training and reinforcement (vs. 50% of other companies).

The 2015 Sales Enablement Optimization Study by CSO Insights is a benchmarking study that examines how companies are actually implementing sales enablement. Here are some of the more interesting findings in the CSO Insights research:

• 25.5% of survey respondents said they have personnel dedicated to increasing the effectiveness of the sales organization (i.e. a sales enablement function).
• In over half (52.5%) of the companies that participated in the study, the sales enablement function reports to the chief sales officer, and in another one quarter (25.3%) of companies, sales enablement reports to sales operations.
• A large majority (72.8%) of companies have fewer than four employees dedicated to sales enablement.
• The top four goals of sales enablement programs are increasing sales efficiency (81.8% of study respondents), increasing revenues (75.8%), increasing new account acquisition (68.7%), and increasing the win rates of forecast deals (64.6%).
• The top four services provided by the sales enablement function are sales training (74.7% of study participants), sales process improvements (67.7%), sales tools (66.7%), and CRM/technology management (59.6%).

Both of these studies provide more valuable insights than I can cover in a single blog post. For example, both studies discuss the importance of good content and the role of technology in effective sales enablement. 

I omitted any discussion of technology in this post because there is a tendency to view sales enablement as something that can be "solved" with a software application. The reality is, a successful sales enablement effort needs clear goals and objectives, the right mix of human skills, and a clear understanding of what services the sales enablement function will provide and what methods and processes it will use. With this foundation in place, the right sales enablement technology can be a powerful enabler of effective sales enablement and a potent "accelerant" of sales enablement success.

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Are Your Lead Response Practices Costing You Sales?

One of the most important requirements for maximizing results from your lead generation efforts is responding to new lead inquiries in a timely and appropriate fashion. Unfortunately, it's clear that many companies still have work to do in order to satisfy this basic requirement.

Timely Response

Over the past decade, several research studies have examined the impact of lead response time on various aspects of lead generation success. One of the earliest was a 2007 study conducted by InsideSales.com and Dr. James Oldroyd. This research addressed several issues related to lead response methods and practices, but the most striking results pertained to the impact of responding quickly to lead inquiries. Here are two of the most significant findings:

• The odds of contacting a lead are 100 times greater when the initial contact attempt is made withing 5 minutes vs. 30 minutes after the inquiry is submitted.
• The odds of qualifying a lead are 21 times greater when the initial contact attempt is made within 5 minutes vs. 30 minutes after the inquiry is submitted.

These findings relate specifically to telephone contacts, and they clearly show that leads go cold quickly.

Since 2007, InsideSales.com has conducted several additional studies on this topic, the most recent of which is the Annual 2014 Lead Response Report. The 2014 study describes the lead response patterns of more than 9,500 companies that were successfully tested by InsideSales.com during 2013. Here are three of the most significant findings:

• 47% of the companies did not respond at all to the submitted inquiry.
• The median first call response time of all companies that responded to the inquiry by telephone was 3 hours and 8 minutes.
• Only 121 companies responded by telephone within the optimal 5-minute window.

Last year, Velocify published The Ultimate Guide to Inquiry Response. This study found that only 21% of web inquiries received a telephone response within 30 minutes after the inquiry was submitted. The Velocify research also found that calling a lead within one minute more than doubled conversion rates (compared to calling a lead 48 hours or more after the inquiry was submitted).

Appropriate Response

These studies clearly show that most companies need to significantly improve their lead response processes. It's also important, however, to understand what this research is not saying. In all of these studies, the potential buyer submitted an inquiry that asked for someone to contact him or her, requested information or a demo, or otherwise signaled that he or she wanted to communicate with the company. Common sense, as well as the research, says that companies should respond to these types of inquiries as quickly as possible.

These studies did not address the situation in which someone views or downloads a content resource or attends a webinar. This type of "inquiry" does not necessarily signal that the individual is ready to have a conversation with the company, especially when the download or webinar is the individual's first contact with the company. I have long argued that companies make a mistake when they respond too aggressively to these types of "inquiries," and these research studies don't contradict this important point.

I have to admit that is one of my major pet peeves. Because of my work, I download a lot of content resources, and I attend a lot of webinars. I often receive a telephone call even when my only contact with the company is one download or one webinar. And the call often comes before I've even had time to read the content resource.

When I accept one of these calls, what's even more frustrating is that it's clear that the caller has done nothing to learn about me, or what I do, or why I may have downloaded a resource or attended a webinar. In almost every case, if the caller had spent ten or fifteen minutes reviewing my LinkedIn profile, the articles I've published on LinkedIn, and the posts at this blog, we could have had a conversation that would have been much more valuable to the caller and his company.

The bottom line? When an inquiry signals that the individual is ready for a person-to-person conversation, then by all means, you should respond as quickly as possible. For other types of inquiries, immediate and aggressive person-to-person contacts may do more harm than good, especially if the caller hasn't done his or her homework.

Illustration courtesy of Search Engine People Blog via Flickr CC.

Why Marketing Can't Always Produce "Goldilocks" Content

Does this scenario sound familiar? You're talking with a marketer for a B2B company, and she says, "We're creating great content - and lots of it - but our sales reps don't use half of the content we develop." Then, you talk with sales reps from the same company, and they say," We need better content! A lot of the content that marketing provides doesn't really help us advance our sales opportunities."

Unfortunately, this scenario is far too common, and it's clear that sales reps don't use content resources produced by marketing for two main reasons. Either they can't find the resources when they need them, or they don't believe the resources will be useful in the selling situation they're facing.

SiriusDecisions recently estimated that 28% of all the content owned by B2B companies goes unused because it's unfindable, and that 37% isn't used because of low quality or lack of relevance. In a survey last year by Demand Metric, only 43% of sales respondents rated their marketing content assets as somewhat effective, and only 3% said they were very effective.

Some people argue that both of these problems can be solved.

• Sales enablement technology can be used to make content resources easily findable by sales reps, and some sales enablement solutions can use data analytics to recommend specific content resources for specific sales interactions.
• By collaborating with sales reps during the content development process, marketers can create content resources that will better meet the needs of salespeople.

Technology can certainly be used to make finding content assets easier, and collaboration between marketers and salespeople should enable marketers to develop content resources that will be more compelling to potential buyers. But can marketing be expected to always provide "Goldilocks" content - content that will be "just right" for every interaction that a sales rep has with a potential buyer? I don't think so, and here's why.

One vital characteristic of effective marketing content is personalization. By personalization, I mean the degree to which the material in a content asset is tailored based on the attributes and anticipated interests of the intended recipient. The following diagram shows the six levels of content personalization.

The table below describes each level of personalization.

Today, we know that marketing content should be segment-specific, persona-specific, and stage-specific. In other words, marketers should consistently develop and use content resources that are tailored for specific buyer personas who are affiliated with specific types of prospect organizations, and who are at specific stages of the buying process.

However, it's just about impossible for marketers to develop prospect-specific and lead-specific content because those levels of personalization require insights that can only be gained through personal interactions with potential buyers. So, these types of personalized content can only be produced by someone who is having direct conversations with the potential buyer - and that usually means a business development representative or a salesperson.

Last year, David Brock addressed this issue in a post at his Partners in EXCELLENCE Blog. Dave described prospect-specific and lead-specific content in captivating terms:

"It's marketing content for an audience of 1 - at this very moment . . . It's content that addresses my specific problem, concerns, and priorities right now - because they may be slightly different from those I have tomorrow . . . The content I need comes from you engaging me in conversations and a discussion about what I do, what my people do, what my boss is expecting of me, what my customers and suppliers want . . . It is specific to me and my priorities today."

For the past few years, the conventional wisdom has been that salespeople should not be spending their time developing content. But the reality is, there are some types of content that only a sales rep can produce. Instead of trying to eliminate all salesperson-created content, marketers should support sales reps in performing this vital job. And salespeople should stop expecting marketers to provide ready-made content for every selling situation.

Top illustration courtesy of CW Wells via Flickr CC.