Tuesday, December 16, 2008
By John Gaffney, Senior Analyst
Every now and then a statistic enters the marketing lexicon and it seems to come up everywhere. Example: The average tenure of a CMO is 24 months. I guarantee you that no other tenure for any other executive position was so well-known and so often quoted. Get ready for another number to achieve power point overload: 47.3% of all marketers don’t know they’re customer retention rates, profitability or lifetime value.
It is a bit stunning and possibly worth every bit of attention it gets. I highly recommend the CMO Council report titled “Routes To Revenue” this data comes from because the whole picture vacillates between an indictment of executive information ignorance, and a hopeful future for customer data. But the customer stat is not my personal fave. For me the finding that 47.9% marketing executives surveyed will test and launch new products aimed at specific customer segments, is a positive sign of recovery. Couple that with the 41% that plan to focus on demand generation and I think we’re looking at priority one for 2009: New business.
Now, I still have my “organic growth rules” T-shirt. I’m not suggesting that any company ignore getting more from current customers, and doing it by segmenting those customers. But new business is very clearly what is on the front burner. New business depends on demand generation and engaging new prospects. I’d hate to think that just 41% of marketing executives get that. But if that’s the case, those companies are well-positioned to control their own destiny.
I think the renewed focus on demand gen and lead gen is actually driven by a few factors outside of common sense. First, mergers and acquisitions are a tough path to growth when credit markets are tight. So they have fallen down the chart to 10%, according to the CMO Council. Second, “cranking up the marketing budget” is not the brave growth strategy it once was. That’s because the marketing budget has become a loose collection of awareness tactics, cute gimmicks, and TV ads that have debatable ROI. Demand Gen and Lead Gen have the most definable ROI.
Now back to that number, the 47.3% ignorance rate. I can understand how companies are a bit mystified about customer lifetime value. I’m pretty confident that any customer at any company retains has lost some value. Trying to predict customer value right now is a bit like calling the over-under for the Super Bowl. We don’t even know who’s playing yet. But retention rates, churn, profitability and other data are simply not up for “don’t know” status.
The best offense a company can play is finding new business. We certainly have developed the tools to automate the leads, track them, and score them. It might even extend the tenure of CMO’s beyond…….Oh, sorry.
Wednesday, December 10, 2008
By Andrew Gaffney, Editor
This is no time to be patient about anything in business. It’s no time to waste time. So when I saw a few reports recently that prove demand gen, lead gen and marketing measurement is still stuck in some Dick Cheney-like undisclosed location for many companies, I sensed an impatience. This is a good impatience, not a “stuck in the grocery line impatience.” I think companies need to be more urgent about developing and tracking their most valuable customers and prospects for 2009.
For the record, two of the reports were from the Conference Board and the CMO Council. The Conference Board found “most companies experience cultural resistance when moving to marketing ROI. Lack of resources, linked to performance objectives, and lack of focus were some of the primary sources of individual or cultural resistance. Major barriers to implementing marketing ROI programs, largely related to issues of business infrastructure, include problems with data availability or integrity (47 percent), technology/infrastructure (41 percent), resource dedication (39 percent), and methodology/know how (22 percent).
The CMO Council study says that less than 47% of marketers around the world have “good insights into retention rates, customer profitability and lifetime value.” If I was running a company that was in the 53 percent of “don’t know” it would be completely unacceptable.
So let’s take what The Conference Board says is the most important driver of marketing ROI: Leadership Commitment (63%). And let’s skip the cultural advice. Corporate culture for me has always been best defined as “the way things get done around here.” Focusing on the fine points of corporate culture is a luxury. For demand gen, I think executives need to get back to some basics. First, assume that everything you know about your current and prospective customers has changed since June of this year. After that little mental leap, I would follow five steps to reinvigorating growth:
- Convene an executive level demand generation committee. Here I would ask some very basic questions and expect some answers. The questions: What does our most valuable customer look like? Who are some of our top targets and how are we communicating our core strengths to them. Around the answers to these questions, I would have the executive team build a profile of the ideal account and some personas around target prospects.
- Gather a larger meeting with top sales performers. We’re not talking about the Club Getaways or rah-rah sales meeting here. During these difficult times, it is critical to be dialed-in to the folks who are closest to the revenue and have some meaningful dialog with them about your existing business and the realities of the pipeline. The top sales people will be able to provide feedback from your top customers and pass along ideas on how we can we grow them? Maybe the customer or prospect has just reduced its workforce by 20% and will not be able to pay its license fees for Q1. Or maybe the cutbacks will make your solution even more important for them in 2009. This meeting should produce an honest look at the top level of the client base and the prospects for growing it and help define the year ahead.
- Create a demand gen task force: This team needs to involve sales, marketing, and operations. It should have 30 days to define the customers and prospects that the company needs to get, keep, and grow. It should also evaluate the market, competitors and realities that need to be addressed in order to achieve your revenue goals.
- Build a demand gen culture from top to bottom: Key executives need to make sure that the 2009 demand gen effort has buy-in from the team and communicate that the current system is still open for communication and new opportunities. It is important that the customer service agents are aware that their interactions could impact whether a company expands its contract with your company. Equally, the IT department needs to be dialed in to the impact that landing pages and web upgrades have to converting browsers into customers.
- Automate or upgrade automation: The majority of companies now have some kind of CRM of SFA system in place, but many are admittedly not using the systems efficiently and may need to evaluate an upgrade. For those companies that have their sales system automated, but have not yet taken the same steps for their marketing and prospect data bases, 2009 represents a great opportunity to benefit from the consistency, transparency and prioritization these systems provide.
These five steps are most important in an economy where the unfortunate reality is that most current customers are likely to lose some value. Therefore, customer acquisition and customer marketing to protect and up-sell the company’s best accounts will be a vital part of growth going forward. Steps like these tell a company that cultural barriers are history and that all departments put the customer and prospective customers first.
Tuesday, December 2, 2008
By Lisa Cramer, President, LeadLife Solutions
We work with a lot of companies that spend so much time trying to generate leads for sales that they forget to envision their success. They neglect to ask: What if this all works? The focus on generating responses, conversions and hits can’t be truly successful until a company understands what to do when that data becomes actual business.
At some point, you realize that your lead generation programs are working and – presto – leads are coming into the company. But the aftermath is a total scramble. You’ve probably used spreadsheets to track leads for each campaign – that’s if you were fortunate enough to capture all of them that came through. This often required manual intervention and that’s where things most likely started to fall apart. Over the course of my career, I’ve had leads generated by many different types of marketing campaigns but I couldn’t take the actions I needed from a marketing perspective to get the full value out of them before they got into the hands of sales. And you know what happened then – the sales guys complained. The leads, they said, were dead ends.
It became apparent to me that unless I had an effective marketing system, I would generate leads but lose track of everything else. I wouldn’t know where the leads went, which leads should be sent to sales, which ones should be nurtured, which campaigns performed and which we should never do again. I needed visibility through the life of a lead to see which campaigns performed. Today, lead management systems provide this visibility and tracking far before the final ROI is calculated. In today’s economy and ever-expanding sales cycles, that’s key to maximizing marketing dollars.
The Value of Lead Management Systems
Lead management systems simply provide a place where all leads from all campaigns can be deposited, tracked, scored, prioritized, and nurtured. They can gauge the success of marketing programs, and analyze metrics throughout the lead’s life cycle – not just the beginning (the number of clicks) and not just the end (revenue produced by campaign). Lead management systems provide a holistic view into the leads produced from each campaign and how successfully they move through the system. This provides an indicator of the general success of the campaign – specifically, which one is going to produce the largest number of “sales ready” leads. And assuming that the definition of “sales ready” was determined in collaboration with both marketing and sales, it should be a good indicator of success.
Lead management systems also create a great sense of how leads are interacting with your company. For example, an email campaign directing people to download a whitepaper from your site, should allow you to see who downloaded that whitepaper. But can you also see if they interacted with your company before? Did they click on an AdWord, see you at a tradeshow, or click on a previous email? It’s critical to see those interactions to sense if a lead is gone past the research stage and is starting to engage in the selling process. This could happen over several months. It’s difficult to track that manually and it isn’t something sales will spend their time on effectively.
Lead Scoring Helps Determine How Leads Are Moving
Determining the interactions/behaviors or demographic information that is important to my company (remember that of course I’ve sat down with the head of sales to create a shared definition of “sales ready”), makes it much easier to accomplish lead scoring. With lead management systems, develop rules that score different behaviors of the lead and/or different demographic information. In this way, evaluate how leads are moving. Is their score increasing? If so, I can assume that they are interacting with my company more and that means they are more interested in what I have to sell.
Of course, this needs to be mapped back to where the lead came from in the first place. A lead management system should provide visibility into each campaign, how many are progressing and how many are dormant. This kind of information gives you great insight into the marketing you are doing – long before sales actually sells. We all know that revenue is king, but often getting a precursor can adjust the course of marketing campaigns.
Many of us have been asked to generate quality leads, yet never given the tools to do it. We’ve tried to make do with spreadsheets, whiteboards and CRM systems. But lead management systems now exist that provide more than strategy and line items for budgets, they give marketers tremendous visibility and action into the life of a lead. And with this holistic view of leads across all campaigns, marketers can now easily gauge success and failure early in the process and make adjustments accordingly. These adjustments, along with the ability to score and nurture leads, provide the greatest impact to driving value for the lead generation dollars you are spending.
About the Author
Lisa Cramer is president of LeadLife Solutions, a provider of on-demand marketing automation software that generates, scores and nurtures leads for B2B marketers. For more information, go to www.leadlife.com, or call 1-800-680-6292.