David Raab outlined in a recent blog post his current research around the state of the B2B marketing automation marketplace. Raab estimates total spending on B2B marketing automation platforms in 2010 reached approximately $200 million in revenue in 2010. He further notes “… that the industry nearly doubled last year, so the current run rate is much higher.” I had a couple of reactions to this number.
First, it made me think of another number. $129 billion. That’s the amount research firm Outsell estimated in a BtoB Magazine article in March last year would be spent in 2010 on all B2B marketing and advertising in the US. Closely behind that number is the $26 billion Outsell further estimated (in the same report) would be spent on B2B company websites in 2010. It subsequently strikes me that the $200 million spent on systems that are designed to orchestrate and run intelligent B2B demand generation programs still pales in comparison to what seems to be spent on brute-force execution.
Second, it made me think of another number. 24%. This is the percentage of marketing automation adopters, according to a Bulldog Solutions/Frost & Sullivan study, that reported they are ‘generating enough demand’ to meet their sales team’s needs.
On one hand marketing automation technology continues to struggle with more mainstream adoption among B2B marketing organizations. On the other hand, when B2B marketers spend on marketing automation technology – what is pretty robust technology that can do a lot – a minority seem to be finding success. This all points to a pretty dismal state of evolution in our B2B demand generation efforts.
What’s to blame for the failure of modern B2B demand generation?
It’s not the technology. Technology is not failing B2B marketers, but neither is technology a panacea.
Marketers, what they know – or rather what they don’t know – and how they approach demand generation are to blame. People, process and content, as I noted in a past blog post. But it’s not their fault. Marketing practice developed over the last forty or fifty years – i.e., since the Post World War Two ‘Mad Men Era’ – completely fails B2B marketers in the modern demand generation environment. This marketing ‘science’ was designed by tagline-creating, ‘big-idea’ martini-guzzlers at ad agencies in an era of Seller power. This is an era that is forever in our past – an arbitrage opportunity that is long gone. In the modern Web 2.0 world, Buyers have power, not Sellers, and this new polarity requires a very different approach to B2B demand generation.
But let’s get granular. Rather than just make a broad brush statement here, we should dig deeper into the mechanics. What’s a marketer to do?
Why do (well-intentioned) B2B demand generation efforts fail? Here are my top three thoughts about how we get off track – why we fail – and what we can do to begin moving again in the right direction:
Failure #1: Your plan is not (really) built around your targeted buyer(s).
This needs to come first. There are many reasons why we fail in our B2B demand generation efforts, but often at the core – or closely related to another reason for failure – is this fundamental point. Too often B2B demand generation plans are not built around the modern B2B buyer and his/her information consumption needs. Rather, plans start with a product we want to sell to the market, and we subsequently develop a sales plan and operate a selling process to foist it on as many unsuspecting, uninterested buyers as possible. I’m not sure if this strategy worked decades ago, but I can assure you that in the modern environment, this definitely doesn’t work. And I’m not just talking about the need for ‘targeting’ or ‘segmentation.’ We often already do this – in a cursory way – but we don’t go far enough.
What I’m advocating for is a complete realignment of your B2B demand generation processes around the buyer – literally making every point of communication and contact focused on and driven by the needs and behaviors of the buyer in his/her buyer-education process. This means getting away from our linear, mass-marketing mindset – one that too often results in a ‘push architecture’ that is only working when we’re driving it – and instead moving to an iterative, buyer-driven mindset – one that looks more like a ‘pull architecture’ and that is ‘always on’ and always available when and where a buyer needs it most. (And I’ll go ahead and say I do believe that marketing automation is critical to succeeding with this new architecture, but you must put process in place first.)
I’ve spent a good portion of the last two years of my career – first at Silverpop and now at Left Brain Marketing – advocating that the greatest challenge we face today as B2B marketers is this seismic shift that has occurred in the power balance between Sellers and Buyers. A year ago I published a blog post that dug into the deep numbers proving that the nature of the B2B Buyer has changed. And this past August, I published a follow-up post showing that the lack of Buyer focus is significantly impacting our demand generation programs.
Now it’s time to do something about it.
This means starting with a real, deep understanding of your buyer and his/her education needs. It means aligning content across search, Web assets, social media and email nurturing campaigns that is aligned to when/where a buyer is looking for information. There should be a coherence to your content marketing efforts – not simply relying on one-off offers and promotions. This means rationalizing whether you pursue a channel and/or content piece based explicitly on the role it will play in supporting the buying process. This also means reframing some of your KPIs to focus granularly on the linkages between specific content offers, and sequences of content, and fundamental revenue outcomes. And all of this must happen before you build your first campaign in marketing automation – a point most marketing automation vendors even agree with.
“A key to marketing automation is reframing your thinking to focus on your customers’ buying process rather than your selling process,” notes Eloqua CTO Steve Woods in a blog post. He cautions, “Before you implement a marketing automation program, you should map how your customers move through every stage of the buying cycle and become aware of their questions and concerns throughout each stage.”
Failure #2: You are focusing on lead quantity over quality.
This is the bad practice direct marketing methods have taught us. What no one talks about is the diminishing returns of this so-called ‘science.’ Imagine trying to explain to a non-marketer how by any stretch of the imagination it makes sense or is efficient to send out snail mail and email messages to people that mostly don’t care about what you have to say and recognizing that a ‘good’ yield is in the single digit points. Aren’t we obsessed as a nation with the price of oil and energy efficiency? Efficiency! Yet what is more inefficient than traditional mass-context, direct marketing techniques? We’ve got to get to a new mindset – one that is focused on outcomes, not mere activity – as B2B marketers. This means trading big numbers of low quality leads for smaller numbers of high quality leads.
“[O]ne of the outcomes of generating quality leads means less volume because you’ve removed the unlikely candidates and extended the dialogues with those who remained,” explains Ardath Albee in a post on her blog. That makes sales managers nervous, because they think that what they are doing is merely a numbers game. Albee challenges this mindset, “But it also means those leads will have a higher propensity to convert into customers.” And this ultimately results in higher revenues.
The research supports this. Lower quantities with higher quality actually improve sales performance, whereas flooding a rep with a higher number of lower-quality leads can actually decrease his/her total performance.
Joe Galvin with SiriusDecisions explains in a November blog post, “What our research is proved is that the performance of sales reps who managed to a 4X or greater pipeline was lower … when compared to salespeople working with 3X or less pipeline requirement.” Galvin continues, “[S]ales reps that focused on fewer, more winnable deals tend to do better. Flooding the rep with low quality/high quantity leads only increases their inefficiencies … .”
How do we get to this scenario? It requires taking your newly-crisp knowledge of your targeted buyer and translating that into a clear definition of what constitutes a Sales Ready Lead and that is likely to lead to a Sales Opportunity … and convert into revenue. This so-called Universal Lead Definition for each buyer persona targeted will help serve as your benchmark and will improve the revenue yield of your demand generation efforts.
Failure #3: You don’t frame your B2B demand generation plan in terms of a.) your revenue objectives or b.) the ‘reverse funnel math’ it will take to get there.
Why do you want to know your buyer and understand what a quality lead looks like? Because this is the path to more efficiently and sustainably achieving your desired revenue outcome. Unfortunately, this is where the third ‘sin’ of B2B marketers in demand generation often surfaces. Are you framing your demand generation efforts in both a qualitative and a quantitative fashion? What numbers of leads at each stage and with what rates of conversion do you need to achieve from the top to the bottom of your demand generation funnel to go from Prospect to Closed-Won?
I explained in my recent post on the “Elements of a Modern Demand Generation Plan,” that “… you have to work backwards, and typically this is book-ended by some very large numbers for estimated total number of inbound and outbound marketing Prospect impressions you’ll need to drive to acquire enough Respondents – i.e., raw leads – and subsequently to hit your targeted number of Sales Opportunities per month.”
This is something we do with our clients at Left Brain Marketing. We have a giant Excel model that we use to help do analysis of lead conversion dynamics by stage and that crisp up our quantitative targets at each stage in the process. And this is a critical step in the process through which we develop a B2B demand generation plan.
Source: Left Brain Marketing
May seem like a lot of work – especially for a ‘right brained’ traditional marketer. But going through this process has two key results.
First, knowing your objectives and doing the reverse math will give you a very granular sense of your ‘critical path.’ What do you really need to deliver via your B2B demand generation program at each stage? It helps you carefully construct your engagement, acquisition and nurturing logic, and it gives you an important baseline against which to track your performance and growth.
Second, it’s also critical to better aligning with your sales colleagues. “Being able to describe marketing plans in the context of the sales challenges is the most effective way to demonstrate how marketing has listened and where they can have an impact,” comments John Neeson of SiriusDecisions in a recent blog post.
Fortunately, it’s not all gloom and doom out there – you’re not left without a candle. There are some great examples of successes B2B marketers are having adopting new practices alongside new technology. I saw some great examples of this at this past December’s Dreamforce event. It all starts with process evolution, though, and must come together in a newly-framed, modern B2B demand generation plan. You will also need a hand at some point. Most B2B marketing organizations find it challenging to go through this process evolution. That’s why I’d encourage you to add a demand generation agency to your team of resources in 2011. (And feel free to reach out to me directly via LinkedIn, Twitter or our Contact Us page if you’d like to chat more about your own organization’s challenges with B2B demand generation.)