B2B Marketers, Be Careful What You Ask For

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

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

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

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



 

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



 

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

 

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

TILT: What Advance Readers Are Saying

TILT comes out in just over two months. Here's what some advance readers are saying:

We have all experienced the thrill of impulse buying; being in the mall or your favorite store ready to buy the items in hand that you went in for.  And then you see it.  A pair of shoes on a display; that new suit you’ve been eyeing for 25% off; a new appliance.  For most, that thrill lasts until the bill comes, and then reality sets in about how this unexpected purchase will affect the budget for weeks or even months to come.

For the purposes of this post, agility and being able to make adjustments quickly is a given for credit unions and banks.  We have to make decisions about liquidity, rates, and many other things on a regular basis.  I’m talking about the super huge decisions that set the course for future decisions and results.

In business, the result of “impulse” decisions can be detrimental to the future direction of your financial institutions.  There is always a new piece of technology, a cool marketing trend, and more people to serve.  Decisions about these and other things set (or change) the trajectory of your organization, and you want to make sure that these choices are all pointed toward the same end goal…your why.

Your “why” is why your business operates, and how it operates differently than everywhere else.  Your why is the reason you and your staff members choose to work in YOUR institution. 

It takes a lot of patience to find your why, and even more to stick with it.  Once you define your why, it is important to weigh against it every choice about product suite, target market, branch location, and even staffing to make sure that you are keeping your compass pointed toward that ultimate goal you set as an organization.

I am working with a client that has spent the last three years patiently doing the work to define the credit union they want to be, performing market research to determine who they are best-suited to serve, and getting their data processing and other systems in place FIRST to be able to start serving those members now. 

What has impressed me over and over about this credit union is their fortitude and vision to pass on pulling that lever in order to achieve short-term successes on their balance sheet.  They wanted to get everything right first in order to set themselves up to have a truly unique culture and sustainable growth in the future. 

The patience that this credit union has had during this process is a virtue that has guided and will continue to guide them on the road to success.  Like we say in our office, there are a million things you could do, but a successful business chooses the few things they should do in order to have the biggest impact.

Amanda

We bring these philosophies to credit unions and community banks all over the country to help them with their strategic planning, marketing, and branding initiatives.  Contact me to learn more about how MarketMatch can help your financial institution define its "why" and achieve sustainable growth in the future.  Don't forget to ask about our ROI Guarantee - the only guarantee of its kind in the entire financial industry!

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Great Marketing: It Slices, It Dices...

Hey, friends. Are you tired of your marketing budget getting slashed every year? Are you embarrassed because your CEO looks at Marketing as the Arts and Crafts Department? Well friends, have I got the answer for you…

The Seg-O-Matic … It slices, it dices, it improves your response and blows up your ROI.


Alright, I know I sound like a bad '70's, Ron Popeil infomercial. But, hey ... that cat knew how to sell!

Seriously, folks ... segmentation is all about slicing and dicing. Here's an example:

We have a client who is rolling out a new interest checking account. Like many other smaller institutions, they previously only offered Free Checking and are now expanding their product line with the hopes of acquiring more checking, increasing retention and increasing services per household.

In the span of a 10 minute conversation, we had 7 target segments:

1. Members who qualify for new product - Move them into it
2. Members who qualify by balance but missing ancillary product - Motivate them to open more services to step into the new checking (this segment could have been more than a dozen individual segments is we focused on exactly what they were missing)
3. Those who are close in average balance - Increase balances/retention
4. Members who have required balance in deposits but no checking - New checking/retention
5. Non-checking with loans - New checking, focus on convenience of online banking
6. Non-checking without loans - New checking
7. Acquisition - Self explanatory (this could also be countless segments, but this SEG-focused institution has access to a very targeted list)

So there you have it, an instant strategy for product roll out by simply considering who the product affects, what each segment needs and what those needs have to offer to your objectives.

This client has fewer than 8,000 members, so it would have been easy to create a postcard to sound the trumpets and proudly proclaims the coming of "The Greatest Checking Account in the History of the World." (Could you hear the echo when you read that?!?!) 

We could have printed 8,000 pieces, used "Dear Member" as the salutation, mailed them out, sat back and counted new accounts. But our clients (and your members/customers) deserve better than that.

Segmentation goes far beyond the "haves" and "have nots." Consider your target's needs, how they use you and how you want them to use you. 

The more targeted you get, the more personal you get. The more personal you are, the better you can:

• Speak to specific needs
• Focus on specific calls to action
• Address different objectives in one campaign

The goal is to get as one-to-one as possible. In our example, there were only about 50 members who qualify for the account today. They could easily be called at home in a few hours.

Once you've sliced and diced and analyzed your segments, you'll have a better feel for what tactics you can use to communicate with each. Does your culture fit an external call effort? Can you trust your team to send personal letters? Can you create a process that looks more personal but still takes the responsibility off the front line staff? Should you?

I believe that everything can be prioritized. Once you have a feel for the quantities in each segment and how those segments like to use your institution, you can use this list as a guide:

Hierarchy of External Conversations

1. Personal phone call 
2. Personal letter from relationship manager
3. Postcard direct mail/email specific to the segment
4. Mass media

But Wait … There’s More!
How much would you pay to increase your response rates? 

But wait ... there's more!

Not only does the Seg-O-Matic give you personalized conversations and more meaningful calls to action ... it also allows for better campaign tracking. Yes, my friends, you get it all ... a one-to-one conversation, more objectives met, the power to know which segments respond and which you need to tweak.  Now how much would you pay?

But hurry, this strategy is not sold in stores. It's available to you only for a limited time. Call today!

For more lessons from infomercials click here.

We bring these marketing philosophies to credit unions and community banks nationwide, and would love to bring them to your institution too. Contact us to see how.

With nearly 255,000 visits worldwide, we hope that you enjoy this blog.  If you find it helpful, please share it with your colleagues. Also, check out our YouTube Channel for short video blogs about financial marketing.  

MarketMatch is also a nationally and internationally requested speaker. Contact us to bring our marketing ideas to your next conference.

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How to Avoid Lead Genocide

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

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

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

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

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

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

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

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

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

An Inconvenient Truth About B2B Demand Generation

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

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

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

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

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

 

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

 

 

 

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

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