With B2B Marketing, It’s Back to the Basics
In almost every instance, our clients are dealing with massive sprawl in their marketing technology stacks. After fishing through a pool of nearly 8,000 vendors, confronting integration nightmares, and trying to get a grip on unsecure data, marketing leaders are really tired, and CFOs are starting to take notice.
While the mega-vendors such as Adobe, IBM, Microsoft, Oracle, Salesforce.com, and SAP are building out suites through acquisition, there still isn’t a single place to go or an easy answer for bringing sales, marketing, service, commerce, and digital business models together. This extends across all areas, from content management systems tying back to customer data platforms, payments and commerce tying back to personalization efforts, and an IoT project and field service tying back to a case. We’ve gone through a small scare with the General Data Protection Regulation (GDPR), but more regulations lie ahead.
With tremendous sprawl at hand, the natural response would be to simplify the stack, consolidate down to a few vendors, and focus on experience and integration. But the urgency brought on by digital transformation drives customer experience leaders to a frenzied purchase pattern for more technology to solve the challenges. This endless feedback loop has added too much complexity.
In the B2B world—enterprises selling to enterprises—there is a global list of 2,000 entities that matter. Most Global 2000 companies spend at least 5 percent to 10 percent of revenue on marketing. So with your average Global 2000 company taking in revenue of $500 million, that amounts to about $25 million to $50 million to play around with.
In an account-based strategy, companies tier their prospects and come up with about 25 percent of the market to go after. They typically try to win the market leaders and fast followers. So we can assume most firms will have prospects at about 500 firms; at each firm, only three to five people decide or influence the purchase. That’s up to 2,500 people who are being targeted.
Taking a look at the overall $25 million to $50 million budget, most of these organizations have spent $3 million to $5 million on systems to digitize this process, and then millions more each year to nurture these systems moving forward. This means that at some point, $15 million to $25 million has been spent over a five-year period for a crazy amount of tech
Let’s recap: In the B2B marketing world, companies are targeting about 2,500 people and spending, at the low end, $25 million, which comes to about $10,000 per lead per year. We’ll assume the rest of the budget, ranging up to $25 million, is spent on branding, events, and other marketing-related programs.
The average company has about 25 sales folks. That’s 100 leads per rep. And if we gave them $10,000 a lead to spend, they’d have $250,000 each for their territories.
That’s an insane amount of money! But that’s what folks have in their budget. Companies don’t actually spend it that way; they spend it on all these complicated systems.
Here’s why I’m proposing something even more radical.
In fact, we can do this for a lot cheaper and a lot more value with less technology and less complexity. Go to LinkedIn and find the 2,500 targets. Those folks in the company with the best relationships get those individuals as part of their territory. (Now, if you don’t have the contacts, then scour LinkedIn and find out who does and go recruit that person to be on your sales team.) Armed with 100 leads per rep, firms can arrange a meal at a Michelin-starred restaurant, a reception at a gallery opening, or attendance at a sporting event, or the company can create its own event. Do this six times a year and you probably wouldn’t spend more than $3,000 a year per prospect.
By creating a uniquely tailored experiential program for your prospects, using just LinkedIn and a Google tracking spreadsheet, some kind of messaging system, and an email marketing tool like Mail Chimp or Constant Contact, you can do this all on the cheap and improve your MQL to SQL conversions.
The total cost would be more on the order of $7.5 million than $25 million, and you will close more prospects than ever and spend less time on technology with better results. (Perhaps I go too far. You can keep your marketing automation system, website and analytics, and maybe simple sales force automation.)
Are you ready for the boost to your bottom line?
R “Ray” Wang is the principal analyst, founder, and chairman of Constellation Research. He is the author of the business strategy and technology blog A Software Insider’s Point of View. His latest best-selling book is Disrupting Digital Business, published by Harvard Business Review Press.