Reengineering Sales and Marketing for a New Era
The complex B2B sale has some unique characteristics: higher average value, longer sales cycles, and a number of participants in the purchase process. And it is increasing in complexity. Buyer behaviour in B2B has changed dramatically in the past 5 years as the internet redefines how companies buy goods and services. Buyers are doing most of their initial research online before initiating conversations with vendors and are better informed at an earlier stage. Buyers are also more difficult to reach because of the increasing volume of electronic communications they receive. Traditional marketing and sales techniques are less effective for these reasons. We're moving from a focus on 'outbound' techniques like press advertising, mail shots and cold calling, to 'inbound' techniques based on websites, online ‘pay-per-click’ advertising and ‘content-based’ marketing. The changes present a threat to companies who don't adapt quickly to the new environment, but they offer a huge opportunity for those who learn how to use their online presence to generate demand effectively. The real promise of the new era of marketing and sales is the ability to use automated, repeatable processes to scale up the generation of high-quality sales leads - what we call 'demand generation' – leading to corresponding increases in sales conversions and revenue.
What is a Complex B2B Sale?
A Complex B2B sale is one in which there is a long and complex sales process that requires sustained interaction with the client buyer organisation.
Some of the common characteristics of a Complex B2B Sale include:
- High-value, high-consideration – the average deal size tends to be high, which means there is a greater perceived risk on the buyer side
- Complexity of the product or service – often what is being sold is complex, which means there is a need to educate prospective buyers on its particular features, merits and competitive differentiators
- Extended, multi-phase sales cycles – the sales process doesn’t follow a linear path; there are different phases with different requirements at each phase; and the end-to-end length can range from 3 months to 2 years or more
- Multiple participants in the buying decision – there are different decision makers and influencers at each stage of the sale, with different needs and constraints
- Increased Executive Selling – most complex sales require sign-off from someone at senior executive level, and they may be involved at earlier stages in the evaluation process too
- Increased Demands on Sales People’s time – sales people have to invest huge amounts of time in developing their key prospect accounts. This means they do not have time to chase after low-quality sales leads and it restricts the time
The Internet and the B2B Buying Process
Today, whether someone is buying a plane ticket, a house or a new software system, the search begins online. In complex B2B sales, more of the process also happens online, and more of it is controlled by customers, not your sales teams. Buyers now typically initiate their research online before launching a formal procurement process. This means that by the time your sales staff meet a potential buyer face-to-face that buyer will already have visited your website, downloaded your product information, looked at competing vendor sites, checked your analyst ratings and studied comments on blogs and social networks. You may be excluded from a buyer’s short list without even being aware that a procurement was underway. Or worse still, you may not have featured on the list because the buyer wasn’t aware of you. When the first step in the buying process is to search for information online on how to solve a need then that is the first point at which you need to be found. With large markets, long sales cycles, and multiple individual buyers and influencers, no company can hope to reach them all directly or at the right time using outbound methods. You need to use inbound marketing to make sure you’re found first and found early. There has also been a general increase in the complexity of the average decision process.
The buying process is not a linear, step-by-step process, and the tougher economic environment has increased buyer risk aversion. Average sales cycles are lengthening – in a survey of complex B2B sales, 23% of these sales took 7 to 12 months to complete. This means when prospects first enter your pipeline they may be months away from a purchase decision, so you need to identify ways to maintain an ongoing relationship with them while waiting for them to move into ‘buy mode’. The number of participants involved in a purchase also continues to increase, reflecting organisational risk aversion, with an average of 13.5 people being involved in a purchase worth over rupees 1,000,000 ($25,000) in companies of 500 to 1000 employees. The longer sales cycle and large number of participants make it increasingly difficult for sales teams to identify the key influencers on the buyer side and to control the overall outcome of the process using traditional approaches.
How B2B Companies Generate Demand Today
In most companies with a Complex B2B sale, the Sales unit has held primary or sole responsibility for lead generation, with Marketing providing a supporting role. Sales teams rely on their personal and professional networks to identify prospects and occasionally use telesales as a way to root out additional opportunities. In support, B2B Marketing units have traditionally used a range of ‘outbound’ techniques to help generate leads, including tradeshows, print advertising, telemarketing, seminars and direct mail.
There are three main problems with this approach:
- It ignores the new buyer behaviour – relying on cold calls and direct mail assumes you know who to call or mail to begin with. But, as we’ve noted, it’s unlikely you will know the broad range of participants in a B2B procurement. And while the company has focused on this outbound approach, they will have missed the many other prospects searching online for the product or service they could provide.
- It is inefficient – many direct outbound marketing techniques assume very low response rates. In cases such as print advertising in trade journals there is no accurate way to gauge the response rate. This means that over 95% of promotional activity may not be reaching an appropriate recipient.
- It is disjointed – typically there is a lack of alignment between sales and marketing in many B2B complex sale companies. Sales are under huge pressure to deliver results (new sales) and feel that the leads marketing produce are of low quality, causing them to waste time chasing ‘red herrings’. Marketers in B2B firms are often frustrated because they devote time and money to lead generation activities only to see the resultant leads dropped or ignored by sales teams. The result is two teams vital to the success of the organization who don’t understand each other.
A New Approach to Generating Demand
The new buying process requires a new approach to sales and marketing, one that aligns the sales and marketing teams, reflects a deep understanding of the buyer and uses digital marketing tools to support lead generation.
Just like in any form of marketing, digital marketing can only be successful if the buyer is understood and your value proposition is clear. Digital demand generation for business-to-business complex sales must therefore start with buyer and needs analysis, the creation of propositions to meet buyer need, and only then the use of digital tools to raise awareness and generate leads with buyers.
So, to execute an inbound B2B marketing strategy, companies draw potential buyers to them online by providing a range of relevant offers, such as research papers, industry surveys and buyer guides. Offering useful business-oriented content lets you demonstrate your worth to prospective customers, eliminating buyer uncertainty and establishing a relationship. In exchange for that content they capture some basic contact details from the visitor, and use this information to begin developing a profile for each ‘lead’. They identify the visitors most likely to be of interest using data such as location, company name and social network profile, and encourage those visitors to continue interacting over time, gaining further insight into the person’s stage on the buying cycle at each interaction. When a particular contact meets some predefined criteria to indicate they are entering the buying stage, the lead is passed to the sales team, along with the lead’s interaction history.
The main elements in the new approach are:
- Agree responsibilities - In our view lead generation is best handled by marketing, letting sales staff concentrate on selling to genuine opportunities.
- Agree a common lead definition - Marketing and Sales should agree what constitutes a sales-ready lead. This could be characterised by company size, revenues, location, industry sector. Having this conversation is the first step in aligning the activities of the Marketing and Sales units so they both reinforce each other.
- Understand your buyers - Identify the people involved in the buying process, their specific needs, their role in the decision making process, and the kinds of organisations you are targeting so you can build a picture of the key players and the buying process in a typical sale.
- Create compelling offers - Based on your knowledge of your buyers and what interests them, create ‘content’ that will attract them to your online presence. In B2B complex sales this content typically includes case studies, white papers, webinars, recorded demos, online videos, analyst reports, buyer guides and ‘how to’ guides.
- Drive buyers to you online - Again based on your knowledge of typical buyer organisations, use the full range of available digital tools to drive relevant traffic to you online. Use Google pay-per-click ads, Search Engine Optimization, ‘opt-in’ email campaigns, social networks, online PR and other methods to build a constantly increasing stream of visitors to your website. In addition, continue to use selected ‘offline’ promotional methods such as direct mail shots and high impact trade shows to reinforce the online program
- Capture contact details - In return for offering buyers high quality content such as an analyst report, request some basic contact details, such as name and email address. You can then use this information to do a first-pass assessment of the visitor e.g. which company they come from, which geographic location, whether they have a profile on LinkedIn etc. If they have visited your site before, you can begin tracking their history of interactions with you.
- Filter your contacts, sell to the hottest, nurture the others – based on the profile of the contacts and your agreed lead definition, you can identify those that are of greatest interest. Qualify those leads that seem to have potential (e.g. by having a telemarketer ring to ask what their interest in the solution is). Any leads not yet ready-to-buy but who fit the target profile should be placed in a program of regular follow-up communications to ensure you stay front-ofmind.
By adopting this process-centric, online marketing-based approach, you are now much more likely to catch the broad range of participants involved in a B2B purchase. You are also making more effective use of your time – rather than calling one hundred people in the hope that three will answer as in the old approach, you are now pursuing contacts who have already indicated an active interest in what you have to sell. Instead of having sales staff pursue low-grade ‘red-herrings’, you are qualifying all contacts using agreed criteria and only handing sales-ready leads to your team. You can see what you get for your money too – with online lead generation you can match up every dollar spent with the results, often within minutes or hours, letting you decide which tools are most effective at generating high quality leads.
Finally, this approach is easy to scale-up without having to increase headcount. You can automate email follow-up campaigns, run multiple Google pay-per-click ads and your website can capture visitor details 24 hours a day, 7 days a week, all without intensive manual input.
Building a Demand Generation Machine
Many B2B companies suffer from an unpredictable flow of leads and from leads of varying quality. As sales slow down or stall, these companies tend to focus on the bottom end of the sales-funnel to find solutions. Should we change our sales pitch? Should we change our product demo? Should we retrain our sales people in strategic selling? Should we change our sales team?
These problems should be addressed by developing a set of processes within sales and marketing that generate a constant and predictable flow of leads. Creating and nurturing leads through automated demand generation processes using digital techniques will ultimately result in more deals and a higher conversion rate. Demand Generation should be treated as a key operational process, in the same way companies have defined processes for product development or financial management. The objective is to build a ‘machine’ that produces a predictable and repeatable flow of leads of standard quality each quarter.
The first step in building this machine is to ensure both sales and marketing understand their respective responsibilities. While Marketing covers a broad range of activities, in complex B2B sales a key responsibility is to generate leads. Likewise, the function of the Sales department is changing, with more focus on selling to key opportunities and less time spent on prospecting and chasing cold contacts. The Sales team should look at Marketing as the people who fill the top end the sales funnel. The buyer doesn’t distinguish between sales and marketing and so it’s the company’s job to follow the buying process. In future the line between Sales and Marketing will become blurred and the two will share a more clearly defined collective focus.
With Sales and Marketing aligned, the next step is to implement processes and tools to generate and then manage leads. This means setting up online lead capture, coordinating email marketing campaigns, managing pay-per-click advertising programs and integrating all of these so that all leads are captured and scored in a consistent way. A new category of software, Marketing Automation systems, is being used to support the creation and management of these kinds of processes.
Importantly these processes should focus not only on generating new contacts and inquiries, but also on ‘nurturing’ those leads that aren’t sales ready, which in our experience is about 75% to 80% of all leads generated. Using digital tools to nurture leads who are either very early stage or just not ready to buy will pay dividends. According to a report, over 80% of generated leads are never followed up, or are dropped or mishandled. Given that Forrester Research has estimated that on average it costs $100 to generate a lead in B2B, this is an expensive waste. A Yankee Group report also found that an 11% reduction in dropped/lost leads combined with a 1% improvement in lead-toorder conversion increased gross annual profits by 136%. All of this suggests that it makes financial senses to systematically manage other leads that are of interest but which haven’t yet moved into the buying phase.
Conclusion
Buyer behaviour in B2B has changed dramatically, reflecting the impact of the internet on the way companies buy goods and services. Buyers are doing more of their research online; they are also more difficult to reach directly; and traditional marketing and sales techniques are less effective as a result. Your aim is to connect with as many buyers as possible who are just starting to identify the need for a solution so you can influence their needs and establish yourself in pole position a candidate supplier. For companies wishing to achieve scale internationally, inbound marketing will help you establish contact with, and nurture, more buyers than would be possible using outbound methods. B2B complex sales organisations should adopt a new approach to generating demand, one that aligns the sales and marketing teams, reflects a deep understanding of the buyer and uses digital marketing tools to support lead generation. Apart from improving demand generation in the short term, the real promise of this new approach is the potential to automate repeatable processes that drive faster and more predictable revenue growth.
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