What do top performers in marketing and sales do differently than other companies? How do they succeed in generating more sales and margins even under pandemic conditions? The first part of our series of topics focused on the paradigm shift in the procurement behavior of purchasing organizations. Based on discussions with managers from purchasing and sales departments as well as our project work, four central success patterns could be identified across all industries.
An important lever is therefore to know the buying behavior of potential customers as precisely as possible. We highlighted the importance of hybrid marketing and sales models and the significance of analyzing the customer journey and the preference structures of decision-makers in analog and digital worlds of experience. The second part of our series of topics therefore explains the following three success patterns of high-growth B2B companies:
- Establish an end-to-end, system-supported process for marketing and sales along the purchasing process of potential B2B customers (customer journey).
- Promote the development of new competencies for marketing experts and sales staff.
- Consistently manage performance via sales funnel management.
1. Seamless Processes, Satisfied Customers
Even if the focus of marketing and sales (through sales representatives) have shifted across the individual phases of the purchasing process, it remains important to offer to customers a continuous and seamless end-to-end purchasing process. From the supplier's point of view, this ranges from addressing potential prospects and lead generation (for the initial purchasing phases of market exploration) to opportunity management (supplier and product evaluation and purchasing purchase decision) to after-sales management.
In practice, however, instead of seamless processes we have found isolated solutions within the marketing and sales departments, as well as what the Germans call a "Zaunwurf" (a “lob over the fence” when things are passed on without any regard for the future process) for process results between the areas - regardless of where exactly the functional boundaries run. Each function uses its own KPIs, data models and systems. The daily operations are thus characterized by numerous system discontinuities, inconsistent data models and different quality and efficiency across the entire process ultimately leaving vast potential undiscovered.
These days, companies can rely on a vast range of established IT solutions for system support of end-to-end marketing and sales processes. Crucial for the realignment is a coordinated understanding of processes and quality, as well as an integrated data model. Even semantic interpretation alternatives complicate this task and should therefore be just as much the subject of a moderation process as the agreement on KPIs, measures and the quality characteristics themselves. The aim of these harmonizations is to create a so-called "single point of Truth" to enable better decisions for market development.
The process harmonization described above should be continued in the organizational integration of the marketing and sales functions. The more complex companies are structured, the more challenging it becomes. While marketing is usually managed as a central corporate function, sales organizations are often decentral and organized by region or product. Both functions have different management processes, incentive schemes and cultural values.
An important first step in this direction is joint planning and regular meetings to evaluate the respective contributions of marketing and sales activities to closing success (see also Managing performance in the sales funnel).
Organizational integration must therefore be designed top-down and broken down to the employee level. The key is to develop congruent goals and to map these consistently in function descriptions, goal-setting processes and compensation rules at the employee level.
2. Inbound Instead of Outbound: New Tasks for Marketing
Changing purchasing habits require a refocusing of the marketing and sales functions in terms of content. For marketing, this means a reversal from push-based outbound marketing to inbound marketing. The more buyers search for and find information online, the more important it is for marketing to offer information that is easy to find, relevant, helpful, and available on-demand (pull).
This is done via different channels such as search engines, blogs or social media. In addition to the multimedia preparation of useful content (e.g., white papers, service tips), instruments such as SEO/SEA, native advertising, and landing page optimization should be used. The respective company and its representatives should be perceived as experts. In order to reach potential customers at the right point in the purchase decision process, content must also be offered specifically for the various phases. This also creates a need for action for B2B sales, which are dominated by field sales. The loss of importance of the information function of sales representatives and the tendency of a buyer to be involved late in the decision-making process are changing the role expectations of sales employees. New fields of work arise from the further development of technical analysis systems and the resulting possibilities of data-based sales.
To put it bluntly: large mid-sized companies will continue to need qualified field sales staff for high-quality business relationships in the future. But the focus on data-based sales topics will increasingly lead to the replacement of field sales staff by internal sales staff, especially in medium-sized and smaller companies. The expertise of experienced sales staff will be in demand less for interacting with a specific customer and more for providing intellectual input on special expertise (e.g., as part of white papers or tutorials) and generating (sales qualified) leads (e.g., through outbound telephony).
Even if buyers in many cases want a completely digital process, the salesperson will continue to play an important role in price negotiations and the development of existing business relationships (e.g., through cross-selling). With the new capabilities of professional data analytics systems, we expect three key content areas for sales in the future: Resource allocation, customer development and price optimization. What is this all about in detail?
First, let's talk about resource allocation. In day-to-day business, the sales support model is often based on the size of the customer. The higher the sales volume of a customer, the more intensive the "care" lavished on them. The disadvantage of this approach is that it disregards the sales potential of a customer who may currently still have low sales promises. This shows how the more sensible allocation of resources can bring added value to sales activities. Using data analytics, companies today also have multiple opportunities to improve the match-up between people and business opportunities and to target their salespeople where they will have the highest impact.
There is also potential for optimization in many areas of customer development. For example, many companies - analogous to B2C sales - are also implementing algorithms in B2B business that predict the probability of the next purchase. In doing so, they draw on data from purchases made by similar customers. This evaluation of order patterns can be used to identify cross-selling opportunities within a customer base and support them with tailored micro-campaigns. This also improves customer loyalty. Machine learning algorithms help identify whether a customer is thinking of switching to a competitor well before the actual jump.
IT is also creating new opportunities in price optimization. Deal analytics provide transparency and enable sellers to make complex compromises during negotiations. In the past, B2B salespeople relied heavily on their own experience to make pricing decisions, but procurement teams have since followed suit with their own sophisticated pricing tools. Dynamic deal scoring now clears the playing field again by providing sales reps with relevant information about the deal during negotiations.
3. Transparent Performance
The key to successful corporate development and management is maximum transparency in the context of the value contribution from individual and sales activities and their relevance for sales and margins. The sales funnel provides the basis for this. This divides the marketing and sales process into phases, which are ideally aligned with the requirements of the various phases of the purchasing process and to which a probability of subsequent order placement can be assigned.
Corresponding to the individual phases (market exploration, supplier identification, supplier evaluation, product/service evaluation, negotiation of terms and conditions, contract negotiation) of the purchasing process, which are generally industry-specific and can therefore only be depicted here in a generalized manner, it is possible to differentiate typical phases of the marketing and sales process. Their completion can ideally be described as a milestone, each with increasing chance of success:
- Marketing Qualified Lead (MQL): The marketing measure has become so entrenched with the potential customer (prospect) that he or she contacts the selling B2B organization.
- Sales Qualified Lead (SQL): An inquiry from a potential customer expresses a need that could be served by the sales organization's products or services.
- Opportunity Generated: A potential customer has signaled that they are generally willing to consider the sales organization to meet their needs.
- Opportunity specified: The potential technical and content objectives of customers, as well as their solution and vendor evaluation logic, are understood and feasible for the vendor organization.
- A quote is created and sent to potential customer.
- The potential customer has expressed willingness to discuss the content and commercial aspects of the offer.
- The potential customer conducts concluding contract negotiations with the sales organization.
Regardless of the online or offline relevance of marketing and sales activities, companies must consistently record and evaluate the value contributions of the activities in the individual phases and use them for management purposes. Two particularly suitable evaluation criteria for the value contribution across the entire sales funnel are the metrics Lead Velocity and Lead Conversion.
The lead velocity rate measures the increase or decrease in leads during a specific time period. Ideally a company generates more leads than it loses through the sales funnel. Studies have shown that for 85 percent of B2B companies, lead generation is the most important marketing objective. Several proven methods exist to increase the Lead-Velocity-Rate. Not all of them are equally effective and successful in every industry and context. Frequently, lead nurturing, content specialization, lead scoring (via automation tools) and follow-up initiatives are often used. Even if lead velocity can be understood as a quantity indicator, this only applies to leads of constant quality. If the quality changes, so do the coverage rates.
Another frequently used criterion for the value contribution of a measure is the lead conversion rate. It indicates the probability of the ales phase activities leading to success. By combining the individual probabilities for each sales phase, the integral of all leads and opportunities can also be used to make statements about the order probability and the expected probable AE can be made. Considering the issues described above, the conversion rate between Marketing Qualified Leads (MQLs) and Sales Accepted Leads (SALs) is of particular importance.
A high conversion rate from MQLs to SALs requires agreement between marketing and sales on what constitutes a high-quality lead. It also requires regular discussion and feedback on whether the leads generated by marketing meet the agreed requirements. This tight coupling follows the logic that marketing (and not just sales) should also be accountable for revenue targets. If the conversion rate for MQLs falls below 50 percent, then this is a sure indication that marketing is not generating enough valuable leads from a sales perspective.
One thing is certain: what has been common practice in the B2C sector for many years now is also making its way into B2B business: customers are gathering information online and can create important decision transparency on their own. This does not necessarily mean the end for many traditionally structured sales representatives. But they will have to adapt to working in hybrid contexts and develop new skills (e.g., data-driven sales). Companies that are willing to change will open up new opportunities to identify and meet customer needs at an early stage. Provided that the company management ensures an up-to-date organizational and content structure in good time and is willing and able to invest in know-how and system support.
Do you have questions about the successful marketing of products and services in B2B business? We will be happy to answer them! Make your non-binding appointment with our expert Jan Ulrik Holsten here: