Let me be quite transparent here – I hope that I am not about to describe my own whole working life as a waste of money! However, I think that there are areas of concern with all B2B sales and marketing activity in terms of productivity or the ‘bangs you get for your bucks’. I am particularly talking about the process of reaching out and connecting with unknown prospects and building relationships where none have existed up to now so that those contacts can be converted into sales. Even in the most effective companies, the success rates of ‘leads’ or ‘contacts’ are not great – perhaps we need a different way of approaching the problem?
It’s not Marketing or Sales that are to blame
I am not going to get into the perennial debate between Marketing and Sales about the calibre of each others work. Statistics from The B2BLead showing that 50% of sales time is wasted on unproductive prospects supplied by marketing and 80% of marketing leads are ignored by the salesforce just go to illustrate that alignment is not optimal in most companies. However, even in companies where the sales and marketing teams are perfectly aligned in a single revenue earning machine they still suffer the unproductive ‘overhead’ I am referring to.
90%-95% of spend is unproductive
Leading B2B consultancy Sirius Decisions estimates that on average only 1.2% of inquiries or responses to sales and marketing actions make it down the sales funnel or ‘waterfall’ to become ‘Sales Qualified Leads’. Even the ‘Best in Class’ only manage 4.4%! Many of the various tactics we use to generate those leads have an even lower productivity, even if they are actually lower cost activities:
Does this mean that we could be wasting 90% to 95% of our Marketing spend? Well, the worrying numbers do not end there.
The Sirius Decisions waterfall model shows an average of only 22% of sales qualified leads ending up as closed deals, with Best in Class managing to convert 31%. This is actually surprisingly optimistic considering a report from Harvard Business Review states that 91% of first meetings fail to achieve success.
So, in addition to wasting marketing spend does this mean that anything from 70% to 90% of Sales costs are also potentially wasted?
Are we going about it all wrong?
I guess that it is not hard to see why there is this high cost to find a customer. The strategies and tactics we traditionally employ nearly all involve the supplier ‘reaching out’ to all potential customers – no matter whether they want to hear from us or not. We are trying to talk to people with whom we have no existing relationship and a very high proportion of whom have no current need or budget for our product or service. No wonder these approaches are unsuccessful. According to research from Gleanster only 25% of leads are ‘legitimate’ and only half of qualified sales leads are ready to buy. This also ignores the negative image impact from too many aggressive approaches that can so annoy prospects. So even when they are in a position to buy, they will not come to that supplier.
Let customers come to us instead
Wouldn’t a more successful strategy be to have an environment where buyers go to suppliers rather than the other way around? The rapid rise in ‘Inbound’ marketing tactics being employed in B2B markets is a significant move in this direction. By publishing content that is of high value or interest to our target audiences, in the places that they go to be informed about latest developments in their industry, we try to ‘attract attention’ and awareness. However, on its own, this is a somewhat uncertain method. Ideally we want to be confident that, when they have a need or desire to purchase the sort of product or service we offer, buyers will come to us for a quote. This is what online marketplaces such as the INNOVO network offer – the chance to build relationships with buyers at the time they want to buy. For a supplier this provides a chance to bid to brand new customers or enter new market segments, and the cost savings from not wasting unproductive sales and marketing activity as a result can be translated into making their offer more financially compelling. That way both buyers and suppliers win!
So – we still need excellent professional marketers to create and deliver Inbound marketing actions and salespeople to negotiate and develop ongoing relationships after they have met in a conducive marketplace. But it does mean less of their effort is wasted.
Phew! I am still needed.
First published on INNOVO-network.com
Image courtesy of Rendeeplumia at FreeDigitalPhotos.net