Funnel imagery permeates marketing. Fill the funnel with a lot of sales leads, then move on to ultimately reach a narrow, well-defined goal. It’s like catnip for sales and marketing teams.
But today’s process is in for a revamp.
The funnel is stretching, as customers dart in and out of the awareness/consideration/decision stages of the buying process. Instead of marketing handing off the baton of warm leads to sales, today’s relationship functions more like a symphony than a relay race. Sales may be sending more emails than marketers. Marketing may play a more consultative, bottom-of-the-funnel role, depending on the buyer’s journey. Like different sections of an orchestra, marketing and sales should work interdependently to produce a company that’s poised for growth.
Consulting giant McKinsey pointed towards this change as early as 2007: “…marketers must work more intensively than they have in the past with colleagues in other functions to develop, deliver, and communicate value propositions to consumers who want independent advice and frequently aren’t willing to pay for higher-touch sales and service.”
What’s propelling this symphonic convergence, and what does it mean for B2B HealthTech? Let’s look at three factors:
- The B2B Buyer
- The Changing Role of the CMO
- The Impact of Marketing Automation on Marketing and Sales
The B2B Customer: Change that Singular to a Plural
The B2B buyer has changed in several fundamental ways:
It’s a joint effort. There’s more than one decision-maker: for B2B organizations, purchases are made by committee of as many as a dozen people. CEB, a subsidiary of Gartner, put the average around 7. You can be sure that millennials are at the table. A 20-something buyer sums up the millennial role in purchase decisions: “…I basically do the research to make the shortlist and my supervisor always approves my recommendation — as long as I have the facts to support it.”
Nearly three-quarters are millennials. According to research by Merit, 73% of millennials are involved in a B2B purchase decision at their company. When they begin their search for a new product or service, Google tells us they start with generic search terms, and average 12 online searches before engaging with a specific vendor’s site. Bonus: Don’t forget the next wave of B2B tech users: Generation Z.
The sales cycle has gotten longer. 31% of B2B buyers said the length of their purchase cycle has increased significantly, and 45% are spending more time researching purchases compared to the previous year, according to the Demand Gen report. As they move through the research process, they rely on content and social media to help them make purchase decisions.
In addition, companies should be taking a closer look at:
Customer retention vs. customer acquisition. B2B businesses are looking at customer retention in a new light. The recurring revenue model that animates most SaaS companies naturally emphasizes getting new customers in order to scale their business. But with 80% of future profits coming from 20% of existing customers, customer retention to enable long-term profitability is getting a new focus. One Bain study found a 5% increase in customer retention increases profits by 25%. Finally, it costs five times as much to attract a new customer than to keep an existing one.
Customer retention matters: 80% of future profits will come from 20% of existing customers
The Data-Driven CMO
The second change propelling a new world order for B2B sales and marketing is the dawn of the digital CMO. “Marketing,” according to Marketo co-founder Jon Miller, “has evolved from being the department that throws parties and prints color brochures to driving pipeline and revenue.” The CMO role is now built entirely around their ability to process information. Given the increasing sophistication of marketing technology, or martech, there’s a lot of it.
Marketing’s role has shifted towards providing strategic insights into the behaviors of existing and potential customers; to identify, understand, and quickly respond to changing market conditions; and to harness predictive analytics to drive future buyer behavior. According to The CMO Survey of B2B marketers, respondents expect spending on marketing analytics to increase from a little over 6% of the marketing budget today to about 19% of the budget by 2021.
The combination of tools and platforms CMOs use to work their digital wizardry is their martech stack. Some may develop their stack according to each stage of the buyer’s journey. Others might organize by tactic. Take social media. Digital CMOs might conduct social listening with Talkwalker, automate their social media calendar with CoSchedule, and another platform for paid social.
A robust CMO MarTech Stack usually includes:
- Content marketing
- Rich media tools (podcasting and video production)
- Social media
- Marketing automation tools like HubSpot
- Advertising platforms like Google Ads for Search Engine Marketing
- Sales enablement tools (HubSpot for its CRM)
- Data and analytics platforms like Google Analytics and Kissmetrics
With the CMO as the chief source of strategic insight into the customer, businesses can better divine customer behavior, avoid pitfalls and move in a more agile and responsive way. They are poised to provide the key customer experience insights that sales will need to nurture leads and grow relationships with existing customers.
At the same time, CMOs are increasingly being charged with revenue growth, and they have to do it by justifying everything they spend — especially if private equity is involved — to grow their business. As a result, the metrics they track are changing.
According to one Deloitte report, “As CMOs become more accountable for driving growth, marketing metrics are changing to reflect this shift. Traditional brand metrics such as impressions, page views, clicks, and time spent on site are often being replaced with bottom-line KPIs including cost per lead, customer acquisition cost, and overall sales growth.”
The Relationship-Driven Sales Executive
B2B buyers increasingly find trust, confidence and validation online, and through their own search capabilities. Marketing provides better customer data insight, with more granular customer profiles, and augments them with lead-scoring algorithms to help sales predict which customers to target, and when. As one sales veteran commented, “Salespeople are as vital as ever for non-transactional sales. But now salespeople rely more than ever on marketing to support and nourish the prospect through the journey.”
Sales, in turn, can use that data, together with their own tools, to make each prospect feel “known.” For example, GDPR and privacy laws are making it harder to send out marketing emails. The emergence of sales automation and customer support tools, together with CRMs, make it easier for sales teams to better manage contacts and leads, answer queries and solve customer problems.
Sales teams are better equipped to do things like send out personalized emails, which can be more effective than a generic HTML email. Lead-to-Account matching technology is another innovation that lets marketing and sales look at the same data.
Some companies are even experimenting with Artificial Intelligence, using AI-enabled agents to “automate early lead-generation activities such as handling basic customer questions and automating initial pre-sales questions.”
There’s nothing cold about this kind of relationship building, as sales leans into marketing, and marketing leans into sales, to enable better targeting and nurturing of sales leads as well as to cultivate relationships with existing customers.
The Customer Convergence
B2B customers do more of their initial buying research on their own. They’re looking for the same level of information and transparency in the buying process as they’ve come to expect when making a consumer purchase decision. Marketers have greater insight into customer buying decisions. Sales has more tools to personalize customer outreach. Now is the time for marketing and sales to bring what they do best and truly focus on the customer.
CMOs should focus on customers through all parts of the customer experience and make it their job to focus every department on customer engagement. It’s no longer about bringing in new customers but also ensuring every touch point, whether human or digital, is dedicated to generating customer loyalty and retention.
The days are waning when marketing focuses solely on lead generation and sales concentrates on account-based activities. Sales and marketing must align KPIs and work more closely than ever to focus on the entire account journey.
The Stubborn Persistence of Product-First B2B Marketing
While the future is shaped around anticipating and responding to customer needs, somehow, the sales conversation is still stuck on product. Remember the CMO survey that had them investing more in marketing analytics? That’s true, but when survey participants were asked, “In what percent of projects does your company use available or requested marketing analytics before a decision is made?” it appears they haven’t quite gotten the message. B2B product companies reported about 32% of projects, and respondents from B2B services companies said about 29% of projects are using analytics. In addition, fewer than 20% of respondents reported that the use of analytics made a significant contribution to company performance. The “data-driven CMO” may be more aspiration than reality.
The CC Bloom Effect
Why? Let’s call it the CC Bloom effect. Bloom, a character portrayed by Bette Midler in the 1988 movie “Beaches,” famously declaims:
“But enough about me; let’s talk about you. What do you think of me?”
Many organizations spend oceans of time explaining how their product works to migrate prospects into customers, only to be frustrated when the prospect fails to convert. It’s the equivalent of talking too much about themselves and not enough to determine exactly what the prospect needs for their business. That warm lead quickly becomes yesterday’s mashed potatoes.
As Thom Gruhler, former Microsoft CMO observes:
“Marketers often focus on O data (operational data) and vanity metrics such as impressions, website visits, or clicks to gauge their success. O data seems great, and we all need it to show ROI. But the truth is, by focusing on the O data, we lose touch with the customer experience….not enough marketers today are tapping into experience data to adjust and re-adjust what they’re putting in front of customers to give them the best experience in the moment. By adjusting to using the right experience data, CMOs and their teams can deliver better experiences, improve sales conversation and revenue growth.”
How B2B Businesses Can Respond
So what’s the path forward for CMOs?
Don’t fall for the tyranny of the now.
The B2B sales cycle is long — and getting longer. Marketing is an asset whose value grows over time. But with the exception of Warren Buffett, did you ever meet a C-suite executive with the patience of Job? That’s especially true for CMOs, because unlike Job, their tenure is short. They’re being tasked to generate ever-improving results before they’ve barely figured out how to prepare for next year’s user conference.
Marketers should invest time to understand business buyers and their preferences, and to optimize messaging and content for every stage of the B2B buyer journey. It’s hard, and it takes time, but it’s a lot better than “ready, fire, aim.”
Focus on profitable customers (yes, profit is important).
Amazon didn’t post a profit until 2001 — seven years after it was founded. Starting a business selling $10 bills for $5 each will create fantastic sales growth and many happy customers, but it’s an unsustainable business. Growth through customer churn doesn’t scale. A customer-centric approach to marketing lays the groundwork for expanding business with existing customers and attracting new ones with the greatest potential for profit.
Help buyers make a decision.
In our data-driven digital world, buyers have almost too much information. There’s lots of options to consider. More people are involved in the process, and they’re all counseling against making a risky, expensive decision. The stakes are high, and potential buyers can be somewhat paralyzed by choice.
Sales and marketing must find ways to give buyers more prescriptive recommendations for products and services. They don’t just dole out data and answer requests; they make recommendations based on a specific rationale. They make buying easier.
Make the right investments.
Prioritize content for customer engagement at every stage of the buyer’s journey; customer information to gain clarity around their specific needs; and campaign data to monitor progress and make improvements.
Think about customer-generated content.
From Yelp to Rate My Professors, expertise has been crowdsourced in every aspect of our lives. So it only makes sense to consider co-creating content with your customers at least. It’s another point of connection with your customers that makes them feel more connected with your company. In addition, customers are more inclined to share user-generated content than branded content. Like garnering a mention in a top industry or business publication, user-generated content provides your brand with that coveted element of trust.
Not Everything is a Nail
When you’re a hammer, everything looks like a nail. When your background is sales, getting more leads is everything. Yet B2B customers aren’t buying the way they used to.
A customer-focused marketing strategy helps B2B businesses, especially recurring revenue-focused SaaS companies, meet changing expectations, elevate themselves from the competition, increase profitability and keep the sales funnel full.