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Marketing’s New Role:Improving Sales Productivity

John M. CoePresident

Protocol B2B

1Protocol Overview

Protocol

Revenue $120MM +

Expertise in key industries> Financial services> High-tech/software> Healthcare> Government services> Telecom> Pharmaceutical> Automotive> Energy> Retail

14 locations across the U.S. and Canada

Protocol B2B – Colorado Springs

15 year old firm with 275 people focused only on B2B

Three service offerings1. Lead Generation and Qualification2. Sales Coverage3. SMB Marketing

Fully integrated six-step process that is media neutral

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2Protocol Locations

3Protocol B2B Experience

Software

Technology

Telecommunications

Energy

Finance

Technology

Manufacturing

Transportation/Logistics

Travel/Tourism

Pharmaceuticals

Health Care

ADP

Alaska Air

American Express

Aspect Communications

AT&T

Cisco

Continental Airlines

Dell Computer

Duke Energy

Federal Express

Hay Group

Hewlett Packard

Ibis Group

IBM

iPass

MCIMercury InteractiveMeridian IQ Microsoft Mitsubishi NaviMedexNCR NEC OracleQwestSABAShell OilStorageTekRitz Carlton ClubThompson HealthcareUnited TechnologiesUPS Xerox

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4So Who’s John Coe?

15 years sales and sales management> BF Goodrich Chemical – Product Manager> Quaker Oats, Chemical – Technical Sales and National Sales Manager> West-Agro – Director and Sales & Marketing> Samuel Bingham – VP Sales & Marketing

25 years B2B direct/database marketing> Integrated Target Marketing – President> Database Marketing Associates – Founder> IBM – National DM Campaign Manager> Rapp Collins Worldwide – Sr. VP B2B Worldwide> Sales & Marketing Institute – President> And now President of Protocol

The Fundamentals of Business-to-Business Sales & MarketingMcGraw Hill – now in second printing

5What’s Going On in B2B?

Buyers are changing their behavior> 72 % of all business people now start their buying process with search> Purchase without a field sales person is not unusual> Many more “buyers” are involved with complex purchases

Sales people are having increasing difficulty seeing buyers> Number of face-to-face calls now averages less than 2.2/day> Key buyers are resisting sales calls unless they deem them needed> Cost per call is increasing faster than inflation - $500+ is common

Communication clutter is great and growing – how to break through?> 5,000 – 8,000 messages a day

Lead generation remains the primary objective of marketing> But, it is harder and more expensive to find quality sales opportunities

Sales people need help from marketing like never before!

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Integrated Marketing Communications

PR ADV D MTradeShows Events Sales

Business Development/Lead Process

IntegratedSales Coverage

Hierarchy of Sales & Marketing Integration

Tactical Expertise

1980’s

1990’s

Today

Future

7Observations on Lead Generation – Group Discussion

Sources of inquiries

Response rates

Offer strategies

Difference between commodity and complex sale

Quantity vs. quality of sales opportunities

Lead qualification methods and results

Lead cultivation process

Hand-off and feedback – closing the loop

Measurement of success

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8Beyond Lead Generation – Marketing’s New Role

Two traditional primary roles of marketing and sales1. Find and get new customers (marketing and sales)2. Keep them and sell them more (sales)

Now, marketing is needed to help cover the customer base as sales cannot see all the decision makers, influencers and users.> In fact, they never could but didn’t tell anybody> As an example, for a technology sale to a large company Marketing

Sherpa reports that 22 people are involved in the buying decision –how many do you think will willingly see a sales person?

While that is the BIG IDEA, the specifics of when and how are quite complicated

9The Challenges Facing Sales Management

Sharing of customer communication and coverage responsibility with marketing is an unnatural act!

> High level of proprietary toward the sales responsibility and customers> Compensation system is not aligned to this new approach

The sales organization has been hired and trained on a differentbasis

> My territory, my customers, my compensation, my job> Best sales person is frequently a independent operator, short term

reward orientated, and not frequently a team player

Prior marketing programs have not, in general, been well received by sales

> How about those crappy leads, and they want to do what?

This change will require a dramatic mind and behavioral modification

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10The Sales Management Quandary

From The New Selling Solution

Profile of sales people>20% are eagles – consular selling>80% are regular birds – push selling

Profile of buyers>20% innovators/early adopters>80% pragmatics, conservatives, laggards

Implications>64% of the sales calls are being made by the “regular”

sales people on the toughest buyers – so why is it so tough to sell today?

>An improved lead and coverage system will help

11Designing a New Sales Coverage Model

Four basic stages of the customer life cycle

>Acquisition or - lead to sale process

>Growth and retention – in depth contacts• Up-sell• Cross-sell

>Loyalty/strategic relationship• Share of customer• Referral

>Reactivation

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12Here are the key questions to ask

What degree of face-to-face relationship is really required in today’s virtual world to find, keep and grow customers?

> Commodity product or service> Modified product or service> Customized product or service

What is the optimized blend of marketing communications and face-to-face appropriate across the four customer life-cycle phases

> Cost per acquisition> Cost per customer retention

What is the receptiveness of the customers to receiving communications via mail, email and phone?

> Ask – do not assume

13Transition of Sales Coverage Models

The first major change in sales coverage was to segment customers by revenue and then assign a media of contact.

>Small – mail or phone>Medium – telecoverage>Large – sales people and NAM’s (now SAMA)>Also, more sales coverage delegated to distributors and

business partners for small customer segments

>But, this first transition in sales coverage model ignored some critical sales coverage issues

• Which ones?

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14Technology Rides to the Rescue

The second phase was to deploy technology

CRM is now pervasive in most all organizations.>50-60%+ of CRM initiatives have failed or have not met

objectives – why?

Internet and e-business models have proliferated.>Email became the new savior, but is overused>Internet enabled point solutions do help

Technology alone will not reach the objective of increasing overall improvements in sales productivity

> It’s not process or technology but people that matter> Most technology is seller based and is not necessarily received well

by the buyer> Look what search is causing

15Only 4 Media are Targetable & Proactive

Four primary contact media>E-mail: $0.05 – 0.40+/contact

• New streaming and other technologies

>Mail: $0.50 – 10.00+/contact• Mail is coming back

>Telephone: $5 – 35+/contact• Fastest growing media in B2B

>Sales call: $100 – 1,000+/contact• How do you calculate cost-per-call?

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16New Sales Coverage Model

The new sales coverage model is the blending of the four primary contact media across all four stages of the customer life cycle to send the right message, at the right time with themost acceptable and/or impactful media of delivery.

Advertising, PR, trade shows, web-sites, etc. are all “surround sound” and while important, do not target an individual with a specific message and offer.

The percentage of each contact media is first dependent on the stage of customer life cycle.

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Sales Cycle Phases

60%

30%

60%

90%

40%

70%

40%

10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Acquisition Growth Loyalty Reactivation

Mar

ketin

g M

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Sales

Direct Marketing

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18Total Sales Coverage Model

Blend of the contact media is also dependent on the nature of product or service sale

>Commodities>Customized product or service>Designed or engineered

Another consideration is the value of the customer in revenue ormargin terms – how much can you afford?

>Initial sale>Yearly revenue>Lifetime value

19Two Basic Productivity Results

Cost of the sales coverage for a current customer>6 calls @ $350/call = $2,100>3 calls, 9 telephone calls, 12 mailings and 12 emails = $1,400

or 33% reduction in cost of coverage

Increase is sales time to cover prospects and customers who could not be seen

>20% more time = 120 calls (600 calls/yr)>6 calls to make a sale = 20 more sales>20 x value of sale = lots of money

Two examples:>Medical equipment company>Major oil company

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20Five Steps to Developing A New Sales Coverage Model

Step 1: Benchmark existing sales and marketing process>Cost of inquiries>Conversion rate of inquiries to qualified leads>Cost of a qualified lead>Average number of sales calls per week/month>Types of sales calls and percentage of each

• There can be 8 or more types of sales calls>Cost of a sales call>Number of calls required to close a sale>Cost of a sale>Win rate of quote to sale>Customer decay rate>Percentage of revenue devoted to sales and marketing

21Five Steps - Continued

Step 2: Establish key gaps between benchmarks and desired goals> There will be obvious one to close> Typically the sales call type and percentage will jump out

Step 3: Develop required capabilities to close the gaps> Internal vs. outsourced capabilities debate

Step 4: Engineer the New Sales Coverage Model> Decision tree and buying process will be key to model> Sales involvement is critical – commitment and knowledge> All media should be considered – even new digital ones> Who sends the message needs careful consideration

Step 5: Execute, measure and adjust> Beta test is advised on a territory or business line

White Paper Hand-Out

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22Buying Process vs. Sales Cycle

Buying process is key to achieve customer engagement>Varies by type of product or service

• Commodity• Modified• Customized

>Varies by market segmentation• Size of company• Industry

>Varies by nature of competition• Direct• Indirect• Budget• Status quo

23Decision Tree

Multiple definitions to describe the people by function>Decision maker

• Individuals• Teams

>Decision influencer• Official• Unofficial

>User>Economic buyer>Specifier>Gatekeeper or “no” person

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24Buying Process Combined with Decision Tree

Observations:>Different people will surface and become involved at different

stages of the buying process • Some will even be engaged at different stages – e.g. an

executive might start the process but back out once delegated

>The number of people and steps will be greatly dependent on the nature of the product/service sale

• Complex sales of high dollar amounts will be the most

>The buyers have a bio-rhythm to purchase – be careful not to rush it arbitrarily or they will likely disconnect

• At times, the buying process will be interrupted only to start again

25Segmentation - Who’s going to get you there?

Macro segmentation -- how your company or group is organized to go to market

> Automotive> Electronic

Micro segmentation -- clusters for marketing campaigns

> Are sub-segments of the macro-segments

One-to-one segmentation -- field sales or telesales

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26Segmentation - Why Do It?

Leads to relevancy of message and offer to break through the clutter.

Tighter targeting reduces market size.

Establishes the most important data elements for database.

Focuses the campaign on the customer vs. the company or product

Helpful in setting lead qualification criteria

27Segmentation Dangers

Too many segments -- too many projects

Wrong criteria chosen for segmentation

Inability to obtain and/or update the data

No people or process support this approach, particularly sales and distributors

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28Micro-Segmentation or Clustering

Micro-segmentation is a process of grouping together individuals and/or companies who share common characteristics into clusters that are relevant in some way to your product/service, selling process or company.

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Geographic

SIC/NAICS

Employee size or revenue

Location type -- headquarters, plant, etc.

Year founded

Fiscal year

1. Demographic Segmentation

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302. Relational Demographic Segmentation

Factual information/data that is linked to the selling opportunity

>e.g. Equipment in use

Sales input can be helpful in identifying the key relational data element(s)

>Ask sales what piece of information would change their sales approach or presentation?

Untapped opportunity for most companies>Competitors can segment using demographic data just as well

as Henkel can.>Stealth marketing can result

313. Sales Cycle Segmentation

Suspect

Inquiry

Qualified lead

Proposal/quote

First purchase

Repeat purchaser

Long term or high value customer

Past customer

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324. Competitive Segmentation

Direct competition- same product or service

Indirect or alternate solution—offset solution as competitive definition

Budget prioritization or restriction

Status quo attitude

335. Behavioral Segmentation

General inquiries – primarily web site hits today

Response to specific offers – all media

Inquiries from search

Responses to email

Trade show or seminar attendance

Multiple inquiries -- company or individual

Purchase and repeats purchases

Calls to customer service

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346. Customer Segmentation

Is the most common analysis >Product or service purchase profile>Sales revenue (large, medium, small)>Margin or profit (not done enough)>Geographic characteristics>RFM - recency, frequency and monetary is a standard direct marketing method of customer analysis -- may not work in B2B

>Other analytic approaches

35How Micro-segmentation Impacts Marketing Communications

Any good marketing campaign plan and creative brief should start with a definition of the “target audience” or micro-segment

The communications will be sharper, and thus produce improved responses and results

The copy is then written with a clear voice that is speaking to the micro-cluster

It naturally creates customer focused communications

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36The Importance of B2B Data

50-70% of the results of a direct marketing campaign are dependent on the list

> The targeting and segmentation process calls out the list needed

>The data accuracy is key to a good list – lists are all different

The single biggest reason CRM implementation has failed in B2B is the poor quality of the data

The value of accurate B2B data is significant as the cost of a lost sale can be high

37The Current State of Contact Data

The Business Card Test

Decay rate of personal contact information is 70.8% in 12-months – one or more changes in the business card (excluding fax numbers)

>3.8% name change>65.8% title/job function change>34.2% company job change>41.9% address change>42.9% phone number change>37.3% email address change

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38Internal Company Data

Four typical data silos>Accounting>Marketing – multiple lists are the norm>Sales – contact data for sales person>Customer service

Nobody is responsible for overall data accuracy beyond their department’s function and usage

No on-going process is in place to clean the customer and prospect data resulting in multiple duplicates

Try this test – select 50-100 customer records and call them to check accuracy of both demographic and contact level data

39Data Hygiene

Two basic B2B data hygiene issues>Company information>Individual contact information

What are the data hygiene processes to use?> Brainstorm all that could be used and implement them all

Who in your organization is responsible for data hygiene and do they know it?

>Primary responsibility>Shared responsibility

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40Merge/Enhancement of B2B Data

Most internal B2B data does not have standard demographic data such as SIC/NAICS code and company size.

First, CASS certify addresses and run NCOA against house files

Then merge/enhance against large compiled B2B data source such as D&B, InfoUSA and Experian or Market Models

> Normal results are 60-75% match rate> Problem is the matching algorithms and inability of software to find the

duplicate record – how do you list and spell DuPont?> Likely that a look-up will be required to complete the enhancement

process> Other methods will be needed to complete the data – telemarketing> Set standards of data input to reduce future non-matching

41Frequently B2B Encountered Data Problems

In order of frequency1.Different address/same company

2.Characters inverted during data entry

3.Different spellings/same name

4.Last name only (no first name)

5.Different company spellings

6.No company name

7.Missing information

8.Duplicate records (customer files)

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42Developed Lists

A developed list starts with a highly targeted companies that serves as the “skeleton” for data enhancement.

Requires merging multiple files from multiple sources>Sophisticated B2B DP experience and software is

required

Necessitates paying for data you won’t use>Higher accuracy and response rate may justify

additional costs

One method is to build the data by site from calling the companies – we call it site building

Consider outsourcing the entire database development process

43Hand-Off, Measurement and AnalysisSales hand-off and feedback system is critical to success and measurement

> Sales must see the benefit to them for accurate and timely feedback

Measurement has three tiers that are sequential and take time toaccurately measure campaign success

> Activity – response rate, cost per response or lead> Value – value per lead> Result – conversion rate, revenue, gross margin and LTV

Analysis> Qualitative – assessment of all involved > Quantitative/Analytics – data driven analysis

Campaign Modification> Over time, results will improve as proper testing and analysis leads to

learning of what works and what doesn't> Failure in DM is not necessarily a bad result – pushing the DM envelop

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44Sales Lead Hand-Off and Feedback

Define the benefit to sales for feedback > There are real benefits, but they are infrequently identified

and communicated to sales> What are some?> Distributors and business partners represent a more difficult

situation for feedback

Flow control> The number of leads sent to sales in any week or month> The 10% guideline

Method of distribution to field must be easy but impactful> Web-based interface to CRM system> Phone calls or email to drive follow-up

45Measurement in B2B

Measurement and accountability are top-of-mind with senior management now – we need to prove our value or be gone!

The measurement ladder>Activity measurements

>Value measurements

>Result measurements

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46Four Activity Measurements

Cost per thousand or CPM

Response rate

Cost per inquiry

Cost per lead

47Value Per Lead

This is a new measurement that attempts to place a value (not cost) on each lead

> Is particularly important on long sales cycle products/services

Is a measurement that bridges the gap between cost and result measurements

>Which would you like to present to management?

Requires a prior result or several assumptions >% of sales opportunities converted to sale (10-20% is normal)>$ value of the sale - first, repeat or lifetime>Obtain the agreement of finance and senior management

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48Three Result Measurements

Breakeven> How many sales are needed to pay for the campaign?> Gross margin on the sale is best, not revenue

Expense to Revenue or E/R>1/10 to 1/25 is the normal B2B range>Can be a replacement for ROI

Lifetime value> 3-year is usually acceptable> Is a calculation that can highlight the value of customer

marketing

49To Sum Up

Sales needs help – they will probably admit it today

Direct marketers have the tools and skills to help

The time is now to move beyond lead generation as the primary role for marketing communications

This may mean some or all of this activity reports to sales

Improving sales productivity is now job #1

It will not be easy or fast, but is critical to success

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Questions or Comments?jcoe@protocolmarketing.com

719-536-3300