Alberta Business Marketing

For the complete article on the CMA web site, please click here B2B Marketing and Sales: Think Lean

Introduction

“The reconstruction of the organization to create demand, rather than to manage it.”

“A significant reallocation of marketing attention and spending from branding and advertising to field marketing and sales enablement.”

“A reality that prospects find you when they’re ready – inbound marketing needs a bigger slice of most plans.”

“A push by the executive suite to drive greater synergies between sales and marketing.”

Each of the above statements is an example of a significant shift that has occurred within the b2b environment over the past five years. The question is, in what state have these changes – and others like them - left sales and marketing?

A new approach

During the early 1950s, the Japanese developed a new manufacturing approach based on just-in- time delivery, lower inventory, continuous improvement and customer value. Considered radical at the time, the concept of “lean manufacturing” (the term describing this system) is now widely accepted, with lean companies successfully enhancing quality while at the same time reducing cost.

Based on the findings of SiriusDecisions’ most recent study of b2b sales and marketing leaders’ pipeline and forecast practices, top-performing companies are replacing the traditional “more is more” sales pipeline approach with an emphasis on higher-quality leads and more accurate forecasting.

The study findings, based on responses from b2b sales and marketing leaders from diverse global industries, revealed that it may be time to revisit traditional approaches to pipeline management and consider the value of lean principles:

- Companies mandating tighter pipelines had a better close rate. Companies that manage pipeline-to-quota ratios of three or less had a close rate that was 32 percent better than their peers managing pipelines of four or more. “Less” improves pipeline quality.

- Companies mandating tighter pipelines had significantly more reps at plan. Approximately 57 percent of the companies with pipeline-to-quota ratios of three or less reported that they had at least 60 percent of their reps at plan or better, compared to only 37 percent of the “four or more” respondents. “Less” improves sales productivity.

- Companies mandating tighter pipelines had more accurate pipelines/forecasts. When asked to specify their greatest forecasting issue, respondents with pipeline-to-quota ratios of four or more said “lack of predictability and accuracy” more than twice as often as the group with lower ratios. “Less” improves forecasting accuracy.
In this article, we take a broader look at how marketing and sales organizations can adopt lean principles to create greater alignment as well as improve overall efficiency and effectiveness.

Fundamental lean principles

Lean thinking is based on four core concepts:
1. Value is in the eyes of the customer.
2. Examine the entire marketing and sales process.
3. Eliminate or minimize waste.
4. Continuously improve and empower employees.

Marketing and sales waste

Lean thinking runs counter to the traditional marketing/sales assumption that more is always better. The following types of waste should be identified and eliminated:

A. Overproduction
B. Inventory
C. Unnecessary processing
D. Time and motion
E. Employee skills/communication

Conclusion

Before embarking on a journey to lean nirvana, there are two important things to consider.

First, the Japanese concept of “kaizen” (or continuous improvement) is in important part of the lean philosophy. It calls for an unending quest toward perfection. Second is a lesson from the past: many of the North American manufacturers that initially attempted to deploy lean processes failed in spectacular fashion. They failed to apply the concept across the entire process; instead, they made changes in just a few functional groups. This will not work because productivity gains in one area can be sabotaged by lack of productivity in another.

In today’s highly competitive and complex b2b marketplace, growth doesn’t come from excelling in one functional area; it comes from the integration of functions and a commitment to process and discipline within those functions. Going lean is a holistic proposition.

Ally Motz

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...A lesson learned from a local charity with a big heart

I have spent most of my career on the agency-side of marketing, working with large corporations in the financial, automotive, and B2B sectors. When I first began immersing myself in the not-for-profit space a couple of years ago, it was an incredibly refreshing change. And while I still balance clients in both for-profit and not-for-profit sectors, my serious passion is in helping the charitable sector succeed. I think there is tremendous value in bringing for-profit business strategies to the not-for-profit space. And certainly in today’s marketing world of engagement and social media integration – what better space to play and experiment, than with a charitable organization – who inherently brings with it a passionate base of people who care personally about the cause. These are the people who will become the ambassadors, and ultimately the fundraisers, for the organization.

In partnering with MacLaren Kiindrid, a new division of MacLaren McCann focused on the non-profit and social good space, I have recently begun working with an incredible local charity – Camp Oochigeas. “Ooch” is a magical place – where kids with cancer can come to just be kids. The work they do with these children is truly phenomenal, and the stories are incredibly heart-warming. But more than that, Ooch is a great example to the many non-profits out there at demonstrating how incredible success can be achieved by leveraging a great cause through an integrated campaign/event. Big budgets aren’t required to make a big impact. A great lesson not only for all you NFPs, but for an agency girl typically accustomed to big budgets.

Starting this week, the CMA Not-For-Profit council will be publishing NFP case studies, to be released throughout the year. (CMA members can view the full case study and video here.) Camp Ooch has the honour of being the first case study in this process. I encourage all NFP’s out there, and corporations seeking a case study in social good, to have a look. It shows how some sound strategic thinking, a strong creative theme, and a whole lot of passion can drive some solid event success. Despite a difficult environment (immediately following Haiti, and in the midst of a recession), the case study shows how Ooch was able to exceed their $500,000 fundraising goal for a single bi-annual event by over $75,000 – in the course of 2 weeks.

… and in typical DM fashion, I’ll finish with a small call-to-action to encourage you to follow Ooch online as they lead up to the upcoming launch of the camp’s newest addition – bringing Ooch to downtown Toronto with a year-round indoor camp for children battling childhood cancer. Those of you in Toronto – keep an eye out for some amazing local market activity in the coming months.

Vicki Waschkowski

Tags: Not-for-Profit
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One need only observe the arc of human history to see that as new technologies and approaches emerge to address age-old problems and opportunities, people with new skills are needed. As hunters and gatherers settled, farming skills became essential. As farming villages evolved into urban centers, building and engineering skills were highly valued. The past five years have seen rapid changes in b-to-b demand creation, with widespread adoption of marketing automation platforms (MAPs), business intelligence (BI) tools, inbound marketing, lead nurturing and Web site conversion optimization (WCO). In this post, we describe new demand creation roles that are emerging as a result, and explain why they will become a standard part of successful b-to-b marketing organizations.

One: Content Strategist
Content strategists are usually found in marketing groups that have realized success from a variety of newer approaches (e.g. inbound marketing, lead nurturing and WCO) that require large quantities of targeted content. As more and more organizations seek improved results from these content strategies, companies will quickly come to realize the need for a role that’s both accountable and empowered to make content creation and management more strategic.
When? As more b-to-b marketers move beyond one-and-done tactics, next generation content creation will be a requirement. We expect it to become commonplace in the next couple of years (2011-12).

Two: Inbound Marketer
Inbound marketing has emerged largely due to deeper understanding of buyer behaviors and the declining effectiveness of standalone outbound tactics (e.g. email, direct mail). Many organizations are now applying inbound tactics in a disjointed manner; those that are best in class are far more sophisticated in terms of integrating and applying inbound strategies into broad campaigns.
When? More than any other new approach, inbound marketing is rapidly becoming a standard part of the current marketing mix; expect continued growth in importance as more organizations find success applying it. For this reason, SiriusDecisions expects the inbound marketer to become a fixture in the majority of b-to-b marketing organizations in the next one to two years (2011-12).

Three: Pipeline Acceleration Specialist
Although improved quality and volume of lead delivery to sales reps over the last several years has resulted in more opportunities, this means there are more deals slowing or stalling in middle and late pipeline stages. Demand creation marketers are often tasked to support this need while still responsible for optimizing the flow of new leads, often resulting in overwhelmed staff and diminished quality of both jobs. Leading organizations identifying this trend have begun dedicating staff to the development of pipeline acceleration programs.
When? Leading organizations already have noted the damaging effects of asking too much of existing demand creation marketing resources, and are beginning to prove that marketing can positively impact deals in the pipeline when dedicated resources are allocated properly. As the need for improved pipeline dynamics increases and acceleration programs become more sophisticated, we expect to see pipeline acceleration specialists become common over the next two to three years (2011-13).

Four: Lead Nurturing Specialist
There are multiple lead nurturing strategies that a b-to-b organization can employ, all of which require different tactics and techniques. Because it is more complex, relies on prospect activity-based triggers, and requires a clear view of lead disposition throughout the demand creation process, lead nurturing has been driven by marketing MAPs integrated with a sales force automation platform.
When? Many organizations are executing rudimentary forms of nurturing, and realizing powerful results that are driving a commitment to significantly increase budget and resource allocation. While nurturing specialists may not become commonplace as quickly as inbound marketers, expect them to become a fixture in the next two to three years (2011-13).

Five: Web Developer
One of the foundational elements of successful WCO is a shift in Web site ownership to a partnership between corporate marketing and the demand center, with oversight from the chief marketing officer. In these organizations, IT takes a supporting role managing key systems, with Web development resources moving into marketing. The result is marketing teams that are focused, engaged and nimble enough to make the continuous site adjustments and improvements necessary for effective WCO.
When? True WCO is becoming an area of increased focus for many organizations; however, most are still in early stages. As organizations realize increased conversion rates and other benefits, demand for IT resources will increase and more Web development roles will find their logical home in marketing. We expect this trend to take hold and become more widely adopted in the next three to five years (2011-15).

While this post explains why we settled on five emerging demand creation roles as the ones to watch over the next one to five years, there were two that were purposely omitted. The first is the marketing automation expert, as this role is already well established in most b-to-b organizations. The second role is that of the mobile marketer; with the overall newness of mobile marketing in b-to-b, the role is just too rare at this time for inclusion. In the future, look for many of these roles to become the norm, and a new set to slide right into their place.

Ally Motz

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Through the ages, advertising has moved from cave paintings to town criers, newspapers, radio and television, and ultimately, the Web. Our most current benchmark data indicates typical b-to-b organizations spend roughly 5% of their marketing budget on online advertising; unfortunately, nearly all of them struggle to demonstrate any meaningful ROI from these precious funds. It is the pervasiveness of banner ads, popups and other Web messages that has vastly diluted their impact; the average clickthrough rate (CTR) of online ads is currently running only 0.3%. In this post, we discuss how differentiation and creativity separate an online ad effort that genuinely builds awareness and attracts potential buyers vs. one that fails to make an impact.

In the beginning there was the banner ad, unfurled across the top of countless Web pages and aimed at no one in particular. However, with advances in Web site optimization and progressive profiling, online advertising can now play a part (albeit small) within a portfolio marketing approach. For companies that choose to invest in this tactic, best practices to maximize results include:

Target the buying cycle. Web users have endless information sources to choose from, so only prospects who see the right ads at the right time will respond. Whichever online site you choose to advertise on (e.g. search sites, content portals, social sites), pay attention to the buying cycle stage of targeted prospects you’re trying to reach. Most online ads target the education phase of the buying cycle, but organizations should also consider targeting buyers in the solution and vendor selection phases by using the progressive profiling capabilities of online advertising platforms.

Leverage social advertising. The emergence of social outlets has given organizations additional advertising opportunities, although social advertising runs the risk of alienating users. In addition to advertising on a targeted blog or community, sites such as Facebook and LinkedIn have ad optimization capabilities built into their platforms. Both include tools that analyze results and measure performance; use these to ensure ads are performing, as our research shows that social sites display as many untargeted ads as other sites.

Generate awareness. Instead of treating online ads as a component of demand creation programs, focus primarily on their use to drive awareness – for example, the launch of a new product, entering a new market, or a new and differentiating feature/benefit of an established offering. Ads should be highly contextual so that they align with the content topics on the Web page that attracted an audience to view it. Always place online advertising on sites that attract the company’s target audience in significant numbers and offer powerful profiling and targeting capabilities. When creating ads, also consider that many users now use mobile or tablet devices and may require special formats.

Integrate into inbound efforts. From a demand creation perspective, weave online ads into larger inbound programs on sites that prospects may visit based on search. While the ads themselves may increase traffic to a site, this doesn’t guarantee anything else; further action is dependent on the content’s relevance to make prospects take the next step. Newer technologies are helping to optimize ad development and distribution by enabling companies to update messages and ads across multiple sites and formats from a central content repository.

Measure the results. If ads are meant to drive an action (e.g. downloading content, completing a form) or a transactional sale and contain a discount or coupon code, clickthrough conversions can be compared with actual sales. For organizations with longer sales cycles, tracking ad performance within an overall tactic portfolio is critical to gauge impact, although this approach has its own pitfalls. On the awareness side, a sample of individuals who click the ad can be tracked to reveal their place within the buying cycle or any other insights into personas that might be gained. In addition, some marketing automation platforms can create and track ads within the overall program mix.

Given the abysmal ROI that online ads deliver, only relying on them to create demand is ill advised. While advances in targeting and progressive profiling can heighten ad effectiveness, don’t expect miracles, especially through newer social channels. Testing should play a prominent part in any advertising program to define success and determine if better results can be gained; it helps determine not only the effectiveness of ad content and targets, but also design and outlet effectiveness.

Ally Motz

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“You have to think anyway, so why not think big?” So said American real estate tycoon Donald Trump, who has built not only soaring skyscrapers, but a host of other business ventures from reality shows to golf courses based on this premise. Such an approach doesn’t work for everyone, however. Take b-to-b marketers, who often suffer not from the fact they haven’t contributed to the business, but that the expectation of what this contribution should be was significantly overestimated. In this post, I share how to practically calculate marketing’s anticipated contribution to the sales and/or partner pipeline in order to ensure proper goal setting and avoid needless disappointment down the line.

To begin the contribution calculation process, an organization will have to agree on the inputs that will be a part of the calculation, and how these inputs will be defined. The model uses a total of nine inputs, which we define as follows:

Total bookings. The organization’s total expected revenue for the planning period.

New bookings. The portion of expected revenue for the planning period that will come from non- renewal/existing business.

Pipeline-to-quota ratio. The desired size of the pipeline relative to the sales quota that sales leadership has set to ensure that there is sufficient opportunity (given opportunity- to-close rates) to hit the new business target.

Total pipeline. The dollar value of the total required sales pipeline using the pipeline-to-quota ratio.

Average selling price. The average revenue per sale for both new and existing customers.

Total pipeline deals required. The number of deals that must be in the pipeline based on the desired size of the pipeline divided by the average selling price.

Marketing contribution percentage. The percentage of the new business pipeline that marketing is expected to contribute.

Marketing pipeline deals required. The number of pipeline deals that will be sourced by marketing, based on multiplying the total number of pipeline deals by marketing contribution percentage.

Marketing pipeline contribution. The expected marketing contribution percentage in dollars, calculated by multiplying marketing contribution percentage by total pipeline.

The exercise we have reviewed is essential to helping marketing budget and plan so that it can deliver a set of specific results. Following are the questions your model should answer.

What portion of the new business pipeline must marketing contribute? The calculation of marketing-contributed pipeline sets the bar for marketing’s piece of the results pie, but don’t stop there. Assess whether this goal makes sense based on the go-to-market model and benchmarks for like businesses to be sure the percentage is realistic.

How many deals will it take to meet revenue goals? This question is critical because it helps organizations work backward in the demand waterfall to determine how many leads will be required in total (based on typical conversion rates), as well as how many should come from marketing vs. sales. Based on this volume, the next step is to look at the level of lead expected from marketing, and the average cost of that lead. Is marketing currently funded at a rate that will allow it to deliver what is required?

Where will revenue come from? Our model accounts for the fact that in many businesses, the total revenue target is comprised of both renewals of existing business (e.g. software-as-a- service, maintenance, training, consulting services) as well as new business. Don’t make the mistake of calculating contribution based on the total revenue number as you will likely wind up with targets that are simply unachievable. The demand waterfall, and marketing’s subsequent contribution, are meant to reflect net new business activities.

Marketing Contribution - An Example
Total Bookings: $100,000,000
New Bookings: $40,000,000
Pipeline-to-Quota Ratio: 3x
Total Pipeline: $120,000,000
Average Selling Price: $150,000
Total Pipeline Deals Required: 800
Marketing Contribution %: 15%
Marketing Pipeline Deals Required: 120
Marketing Pipeline Contribution: $18,000,000

Even Donald Trump has had his well-publicized share of financial woes when some big dreams didn’t work out as planned. The trick for anyone is to sign up for the right goals, with targets that are based on a realistic assessment of how those goals can be achieved. Marketing can improve its value to the business by holding itself as accountable as sales does, but should be wary of targets that are outside the realm of practicality. By gathering proper data and using it in a sensible, stepwise fashion, marketing will be on the road to making its dreams of greater visibility and significance a reality.

Ally Motz

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