B2B

Canadian B-to-B Sales and Marketing Integration Survey

The words “sales” and “marketing” are generally spoken of in the same breath, as their goals should be nearly identical: To get new customers, and to retain and grow current ones. Unfortunately, the reality of the relationship between the two functions in most organizations ranges from strained to working at cross purposes. In an effort to drive better insights into the relationship between the sales and marketing functions of B-to-B organizations across Canada, the Canadian Professional Sales Association (CPSA) recently joined forces with the Canadian Marketing Association (CMA), and SiriusDecisions, and launched an exclusive survey. The B-to-B Sales and Marketing Integration Survey uncovered a wealth of exclusive data and knowledge about the efforts and results being achieved by Canadian companies. Here we present the executive summary of findings and insight from the survey.

Communications: One of the key indicators we wanted to probe was the perceived willingness of marketing and sales staff to make their counterparts successful. Respondents reported a general willingness to make the other group successful (57% Yes, 35% 50/50). However as we’ve observed with hundreds of organizations, the greatest challenges to sales and marketing integration are the lack of integrated processes, effective measurement and goal alignment.

The majority of respondents have formal processes in place for regular communications between sales and marketing (63%). But are they the right processes for effective demand creation and lead management? Are roles and responsibilities clear? Are definitions and handoffs clear? Do sales and marketing have common goals in mind?

Goals: When asked to identify their most important goals, marketing respondents indicated that they are clearly focused on lead/demand generation activities (39%) followed by branding/advertising/PR (28%) and product development/launch/introduction (10%). However, it is rather surprising to see that so little attention and focus is being applied to improving relations and collaboration with sales (7%).

On the sales side, it’s no surprise that sales groups are clearly focused on attaining their revenue growth target (35%) followed by increase/grow revenue from existing accounts (27%) and cultivate new accounts/segments (18%). However, it is rather concerning to see so little attention is being applied to improving sales efficiency and productivity (8%).

It appears that despite their willingness to help their counterparts be successful, marketing and sales are focusing on “more of the same” rather than improving what they do and how they do it.

Lead Generation: Since lead generation and development are key areas of integration between sales and marketing, we asked respondents about their efforts in these areas. The majority of respondents admit that their sales and marketing groups spend less than half of their time working together as part of their lead process (56%).

Expectations are a key part of the equation. We asked sales professionals about their expectations for marketing’s contribution as a percentage of pipeline, the responses reveal that dependence on marketing contributed leads runs the gambit. Most interesting are the more than 15% of respondents that expect marketing to contribute more than 41% of the sales pipeline. SiriusDecisions research indicates that for most companies, that expectation is unreasonably optimistic and can lead to a poor view of marketing if it fails to deliver. Perhaps with such high expectations of marketing‘s contribution to the pipeline, it is not surprising that almost two thirds of respondents rated their marketing group’s efforts as less than good.

The end results of efforts are dependent on skills, resources, processes, and collaboration. Many of marketing efforts and subsequent results can be traced directly to an organizations’ demand creation strategy. The data collected indicates that there is plenty of room for improving respondents’ lead qualification and handling processes. It is not just a matter of getting more leads into the sales process, but getting better qualified leads into the hands of the sales force.

Campaigns: With such high expectations for marketing sourced leads, why do more than two thirds of respondents commission less than five lead generation campaigns each year? But the end goal should not be only to run more campaigns. Sales and marketing must work together to segment and target their efforts to result in better lead qualification and conversion rates from first inquiry to closed sale.

Customer Buying Process: The old approach still in place at many organizations is to align efforts, knowledge and collateral to specific stages of the selling cycle. But increasingly, best practice companies have shown that understanding and aligning with the customer’s buying process is far more important. When asked about this, more than 75% of respondents reported that their selling process is not fully aligned with the customer’s buying process. Just as there is much work to do around the lead definition and management process, and better target campaigns, sales needs to improve their understanding of an alignment with their customers’ buying process.

Recommendations: Based on the analysis of the data and information collected from this survey, we present the following 5 key recommendations:

1. Sales and marketing Integration will only work with buy in and leadership from senior marketing and sales management.
2. Alignment begins by identifying the strategies, processes and systems which must work together.
3. Organizations need to reconcile their current sales process with their customer’s buying process. Use the customer buying cycle as a tool to communicate with marketing.
4. Sales needs to agree with marketing on the lead types that need to be created, the lead definitions, and the actions sales will take with leads provided to them.
5. Organizations need to focus on improving campaign and program efficiency. Improved sales and marketing effectiveness can benefit from collecting proven, effective processes and best practices into marketing and sales playbooks.

Gazing into Marketing Technology’s Future

Clever marketing slogans and tantalizing sales pitches aside, most b-to-b marketing executives realize by now that technology alone won’t chase away their demons. But with a growing need to be systematic, repeatable and measurable in nearly everything they do, finding ways to weave technology’s science around sound process certainly can help keep these demons at bay. Driving maximum value from marketing technology typically comes down to making smarter investment decisions with limited budgets; basically, prioritizing efforts in five key areas that will drive the greatest incremental return.

One: Unified Customer Database
Ah, data quality issues…the bane of many a b-to-b marketer’s existence. Bad data that results in inaccurate records that leads to lost responses, redundant marketing efforts, wasted resources, incorrectly routed leads and frustrated sales reps. Compounding the issue for most organizations is the fact that the problem is far from confined; it spreads across a vast network of disparate databases and spreadsheets. The solution still revolves around the idea of a unified customer database to create visibility into the status and disposition of every prospect and customer across the enterprise, but the application is becoming less pie-in-the-sky.

Two: Enterprise Marketing Management
Coupled with an organization’s need to track and quantify ROI on its marketing investment, economic realities have made it critical for marketers to show their impact on an organization’s bottom line. As a result, a new class of technologies known as enterprise marketing management (EMM) has emerged; EMM combines a marketing automation platform with marketing resource management (MRM) and business intelligence functionality to provide deeper visibility and reporting into all marketing activities, from planning and budgeting to execution and management.

Three: Lead Nurturing
I have witnessed many times the downside of a one-and-done approach to demand creation, where a marketing function interacts with a prospect a single time, then forwards responses to sales and pushes non-responders back to the starting gate to wait for the next campaign. The world of b-to-b demand creation is not nearly so black and white; prospects will have varying degrees of interest depending on where they are in their buying cycle; this interest must be captured and advanced over a period of time. Campaign and lead management solutions that allow you to assign scores to a variety of attributes and activities and to define a series of business rules for further action help “evolve” a prospect by knowing where they are now, and knowing what to do next.

Four: Dashboards
With their ability to provide visibility and actionable analytics across distributed enterprise applications through a single Web-based interface, dashboards continue to draw attention from marketing executives. This promised visibility depends to a large degree on the ability of the dashboard’s underlying technology to not only aggregate outputs from various systems, but to provide analytics and insight that helps executives to modify strategies, tactics and processes for better results.

Five: Sales Systems Integration
Although many organizations are making progress around the strategic and tactical alignment of sales and marketing, the integration of sales and marketing technology has been slower to come about. For the most part, visibility across the demand creation and lead management spectrum has revolved around an examination of CRM-generated data, which is limited due to both a lack of sales adoption and integration with other marketing applications. The use of the CRM system as the system of record for contact data with bi-directional feeds of data is the first step of many to begin to bring the technological worlds of sales and marketing together. Tighter integration between sales and marketing processes will require more systems than just CRM, however. Customized sales communication (CSC) systems used to organize and deliver collateral and tools for sales to drive its opportunities, have the added advantage of allowing marketing to see and understand how content is being used. Marketing and sales leaders also can work together to determine which sales productivity and accounting systems should be integrated with marketing technologies such as territory management and opportunity management systems.

Historically, there has been hesitancy on the part of marketers to embrace technology, as it was often assumed that it would result in a loss of control. But after years of manual business processes and a reliance on decisions made by other parts of the organization regarding the systems they can use and have access to, leading marketers use technology as a key component of their evolution and their relationship with sales.

Marketing In a Down Economy

Though the severity, depth and timing of any economic softening remains up for some debate, that doesn’t mean that chief marketing officers should sit idly by and wait for the debate to settle. Four strategic imperatives can help shelter the marketing function from a downturn of any size and scope, and better prepare it for rapid growth when the curve turns northward again.

ONE: MARKET DATA
Over the past six years, many marketing functions have made significant strides not only in their contribution to the business, but in their ability to reliably gather data and information that can be used to show why slashing marketing spend is the last thing their organizations should do in tough times.

Customer attitudes/satisfaction: By collecting insight on customer attitudes and behaviors, you can help to determine whether the slowdown so widely trumpeted in the mainstream news is affecting your corner of the world. You can assess their attitudes about your offerings, and their current satisfaction levels. You may find you won’t likely be dragged down as much as the herd, and overcorrecting in terms of greatly reducing spend would result in an awful lot of opportunity lost.

Market intelligence: Syndicated and primary research for the marketplaces you are currently targeting can help shed light on whether those markets will suffer more or less as a result of general softening.

Demand creation/pipeline: Many b-to-b organizations have begun to track an overall demand funnel from cold to close incorporating both demand creation and sales pipeline metrics. The data now pouring out of these funnels can help business forecast slowdowns long before deals stall or turn into losses in the historically sales-dominated portion of the pipeline.

TWO: RETENTION
While marketers have grown accustomed to the majority of their efforts to be focused around selling to new prospects, in a slowdown it is critical to keep what you already have, and use this base as a key target for continued growth.

Segmentation/marketing mix: A down economy requires additional work with sales to determine which segments and specific customers are in trouble; on the flip side, opportunities for growth as a result of conditions should also be identified.

Account-based marketing: For accounts with significant retention challenges, developing account-specific marketing plans and assigning dedicated marketing resources to the cooperative execution of these plans with sales can be very effective.

THREE: SALES ALIGNMENT
Marketers in a down economy that work hard to draw their function even closer toward sales have a better chance not only to survive, but to thrive.

Marketing sourced pipeline: Closely monitoring the percentage of sales pipeline uniquely driven by marketing, as well as the organization’s pipeline-to-quota ratio is critical in any economy, but takes on new meaning in one that is slowing.

Sales playbooks: A sales playbook takes an often-overwhelming amount of marketing-created information and distills it into a series of “plays” that can be applied to help facilitate specific stages of buying processes for specific audiences within target markets.

FOUR: MARKET POSITIONING
One of the marketing areas that can suffer the most during a down economy is reputation, due to its general difficulty of measurement and activities that were often unlinked to other marketing efforts. But such a blanket reduction in funding will undoubtedly hurt your demand creation efforts, as it is the influencers in your markets that do the best job convincing constituents that certain projects, products and services are truly need-to-haves.

Public relations: Develop a map of key press targets, feeding them customer stories of cost savings and innovative productivity demonstrated by your customer base, or perhaps showing information from a user conference that highlights customers bucking the recession/slowdown trend.

Analyst relations: Analysts often play a significant role at the beginning of buying cycles (helping their clients determine which problems they should solve) and toward the end of these cycles (helping differentiate vendors from one another).

Social media: Social media is now a way of life for many b-to-b marketers and salespeople. Blogs are a perfect example of the way that traditional media and new media are crossing, as influential bloggers should be identified, targeted, fed content, data and observations even in advance of traditional media to cause buzz prior to mass release. By positioning yourself as a peer to your buyers, you become a go-to outlet for information on a regular basis.

If there is one theme that crosses all four of these key areas, it is to be proactive. Plan and communicate well enough, and that CFO might just go knocking on someone else’s door.

The Decline (and Rise) of the Creative Brief

Now that I've started my own company, I'm reminded of how critically important the Brief Document is to developing creative. And not just good creative, but insightful, smart, relevant and strategically sound creative.

If I had to assign a grade to the average Brief I've seen over the years, I'm afraid I'd be pulling the parents into the classroom to discuss my concern for the child's future. In fact, the future of the Brief, I believe, is in serious jeopardy unless changes are made.

When I first started in this business, Briefs were treated with the respect they deserved -- both by the account people developing them and by the creative people inspired by them. I use the word "developing" up there in the previous sentence because that's really what should be happening -- and back in the old days, that is what happened. Briefs were developed by account people who understood that Briefing Documents were their opportunity to inspire brilliant creative. They weren't just filling out a form or transcribing the Client Brief from one template to another template. (Or worse, doing nothing at all.) They were developing a Creative Brief that added value, a unique perspective, clarity, and most importantly, inspiration.

Client Briefs and Creative Briefs are not the same thing.

Client Briefs contain marketing data, extensive background, customer data, research, the demands of several constituents (product managers, their bosses, marketing managers, their bosses, etc.).

Creative Briefs should be an important distillation of Client Briefs -- not just a cut and paste of the Client Brief into the Agency Creative Brief template. The Agency Creative Brief is an opportunity for the agency to gain consensus. It should be used to ensure that there is a common understanding of what is being asked by the client. The focus should be crisp. Once developed, it should be discussed, face to face with the client to ensure that what they're asking for is being understood and communicated.

When I became an Associate Creative Director, one of the Account Directors with whom I worked suggested that I review the Briefs his account team wrote before they went back to the client or were briefed into a creative team. At the time I thought that was an unusual request. But then I realized that the Creative perspective on a Brief is different than the Account Team's or Client's perspective.

I've reviewed Briefs ever since. Upon review, I would have a discussion with the Account Person and if I had any questions or if I needed clarification, they could be addressed either by said Account Person or by the client before using up valuable Creative Team time. (Too often, the strategy gets figured out during the Creative Development process instead of during the Briefing process.)

By the time the Creative Team was briefed, the Brief would be strategically sound, clear and creatively inspiring. And that means, the creative product would be right the first time. (Right the first time from the client's perspective -- because the work would fit the brief like a glove.)

So how do you know if your Brief deserves a passing or failing grade?

1. There can only be ONE Key Communication Objective. It should be one sentence. No longer. And it should be directly linked to the Customer Net Takeaway section of the brief.

2. Think about the Consumer Problem. The Brief should clearly and simply communicate what the consumer problem is. Your product or service is the Solution to that problem. And the features and benefits are the Proof that your product or service delivers. (I've just told you the secret structure to any campaign in any channel. I guarantee it works.)

3. The Features and Benefits. They are not the same thing! Knowing the difference and communicating them clearly make all the difference.

4. The Product is not the Offer. Make sure the offer is clear and it'll be clearly communicated in the Creative.

5. There is such a thing as too much information. Say everything as economically as you can and everything will be that much clearer.

6. Target Audience. If there's only one target, great. If there's more than one target, then you probably need a matrix breaking down how the Key Communication Objective changes against each target.

7. What does the Target Audience currently think? And what do we want them to think once they've been exposed to our campaign? This is important because it gives the Creative Team inspiration for how to overcome customer objections to your offering.

There is so much more that could be written about the Brief. And you're probably reading this and thinking how basic it all seems. But if you can answer YES to any of the following questions, then it might be time to think about briefing differently.

1. Does it ever seem like the Agency/Creative Team isn't "getting it"?
2. Do you ever sit in creative presentations and think "this isn't what I asked for"?
3. Do your Creative Teams ask too many questions after they've already been briefed?
4. Does it ever take more than one round of Creative to get what you thought you were going to get?
5. Do you feel like your Agency isn't adding any value?

I guarantee that if you challenge your Agency to write a Creative Brief, (or as an Agency, if you take the time to develop a Creative Brief for your teams and your Client) you will get better Creative, faster. You will cut down on the rounds of changes/new concepts. And that means you will be paying for fewer hours.

People think "process" takes up too much time -- then end up paying for the extra hours when the work needs to be done the second time.

Stop the insanity. Fix the Brief.

Social Media in B-to-B

As more b-to-b organizations explore social media as a way to raise awareness and create demand, they must first understand what is shaping the social media landscape. According to our research, roughly 50% of b-to-b organizations are utilizing some type of social media, reallocating a portion of their traditional media spend to do so. We’ve identified 8 categories of social media that can influence b-to-b marketing efforts including:

1. Blogs. Web logs or journals that allow readers to comment on and create links to and from other entries or posts. Primarily text, blogs can also include video or sound files.
2. Social networks. There are two types of social networks. Online communities such as MySpace and Facebook allow users to post profiles about themselves and connect with others, while professional networking sites such as LinkedIn and Jigsaw enable users to link to others through their association with friends or colleagues.
3. Forums. These message boards were first seen in the 1980s, where users with similar interests exchange messages. Most forums are moderated and focused on a particular topic or function.
4. Podcasts. Syndicated or subscription-based digital media files that can be downloaded or streamed, providing automatic distribution of new content. Podcasts can be audio-only, or include video.
5. Media sharing. Sites that let users upload, download, link to, comment on and rate digital media such as videos and images.
6. Web feeds. Content data format that notifies users when updates are available; these users then click through to the new content.
7. Wikis. Collaborative documents that are created using a Web browser. Contributors can add, delete or edit content, and notify other authors of their changes.
8. Social bookmarks. Sites such as del.icio.us and Digg that enable users to store and share Web bookmarks typically organized by tags into lists. Bookmarks can be public, private or restricted to a certain group; users can rate and recommend bookmarks, and many bookmark sites provide Web feeds to notify subscribers of updates.

While the “cool factor” of these social media types make many of us want to try them all, the impact and value of each type varies dramatically. I have no doubt that social media can be a valuable addition to the b-to-b marketing arsenal, particularly to grow brand awareness, increase customer loyalty and enable knowledge sharing both internally and among our customers. Demand creation, however, is more of a stretch, certainly for those organizations that do not closely adhere to social media’s rules of the road.

Under Marketing’s Influence

With marketing now involved in more tasks from cold to close than ever before, it's time to re-examine the potential span of its influence, and in turn how this influence should be pursued and reported up to the higher levels of the organization.

It’s often easy for marketing leaders to become so fixated on having to generate a tangible “lead” with everything they sponsor in order to justify its cost, but this ignores critical areas of influence that must be sponsored, actively driven and measured. The four types of influence include:

Sourced. The generation of an opportunity that can be tracked back to a marketing-sponsored program.

Recycled. Leads that should be recycled back into marketing for additional nurturing/management until they exhibit certain characteristics or behaviors, thus reducing lead waste.

Touched. A hybrid of programs and support designed to help others source and migrate opportunities.

Facilitated. The targeting of and messaging to the sources that are internal or external to an organization that play an advisory (but not final decisionmaking) role at key junctures in a buying cycle.

By changing the paradigm on which we evaluate marketing’s influence, we widen its charter and provide additional opportunities for it to make a difference.

Peering Into the Marketing Crystal Ball - Part III

Here are the final two of four key areas that together will challenge b-to-b marketing leaders in the upcoming year.

Three: Expanding Influence
Ah, the arguments that emanate from the hallways of b-to-b organizations worldwide, as sales and marketing fight over who actually sourced the lead that blossomed into a huge revenue producer. When marketing sees its only influence on results as “sourced” pipeline, these arguments will not only continue, they will grow louder, meaning that marketing must expand how it defines its influence on the enterprise. We recommend a four-pronged strategy for the evaluation of marketing’s business influence, including sourced, recycled, touched and facilitated. “Recycled” influence evolves around the measurement of how many leads that are fed to sales and rejected for various reasons are deposited back into marketing for further nurturing, as well as how many leads are resubmitted and what opportunity these leads wind up driving. This puts particular attention – and definitive value – on a critical role of marketing that is often scarce in b-to-b organizations. “Touched” influence measures how marketers are impacting demand that they do not source, whether the demand is sourced within inside, field or channel sales. We continue to see many marketing functions that have the charter not only of filling the top of funnel, but helping to propagate demand within the funnel that they no longer own. By leveraging the materials they are using to create “original” demand into tools and mini-programs that can be administered by sales, marketers drive incremental spending leverage and impact. Finally, the notion of “facilitated” demand revolves around the reputation-focused activities discussed above. By targeting key categories of influencers – both “formal” and “informal” – spend on reputation can be demonstrated in terms of its ability to foster demand creation.

Four: A Technological Crossroads
Every day, technologists are building an increasing number of tools and services to assist the b-to-b marketing function in its quest to be more systematic and measurable. And while these tools and services are being purchased at rapid rates, the ability for many organizations to use more than their most basic levels of functionality has been challenged at best. This is due to the fact that in all cases – whether we are discussing lead scoring, automated lead routing, tool/collateral delivery, message measurement efficacy or any other marketing innovation – the technology must be backed by process, and leadership at an executive level. One of the greatest threats to these technologies is their own marketing efforts, promising the ability to be up and running quickly; what’s “up and running” generally isn’t the advanced functionality in these systems, due to the fact that they require significant planning and collaboration between marketing and sales to make it work. Without constant drive from a marketing leader to ensure that maximum advantage is being gained from these often expensive purchases, companies tend to drag their feet when it comes to this planning and collaboration. The technology is now available to tackle the tasks that only five years ago were nearly impossible at worst and highly manual at best. We believe the technology can work. But we also believe that we are quickly heading toward a watershed point with these technologies in terms of whether their promise will truly be realized, or only a portion of their promise as we have seen with CRM/SFA systems.

A common theme for all of these imperatives is strong marketing leadership, the kind of leadership that is required to change the way the function measures itself, collaborates with sales and organizes for success. Driving change doesn’t only require conviction, however; it requires focus. When 2009 comes, will you be able to say that you were wedded to the right changes?

Peering Into the Marketing Crystal Ball Part II

In this post, I will discuss the first two of four key areas that together will challenge b-to-b marketing leaders in the upcoming year.

One: The Intersection of Metrics
What should we measure? This question, or some variation on its theme, dominates many of the interactions we have with our marketing clients. The heart of the answer lies in the theme of intersections; more specifically, the intersections that occur across the three core b-to-b outputs of reputation, demand creation and sales optimization/revenue. The intersection of reputation and demand creation largely focuses on influencer impact; it helps to seed the ground for demand to be created more effectively. The intersection of demand creation and sales optimization is all about the facilitation of the demand funnel from cold to close. The intersection between reputation and sales optimization focuses on message deployment, and the consistency and efficacy with which the field communicates your core value propositions about an organization. The fourth and final intersection brings all three outputs together to drive a mantra that should drive every b-to-b marketing executive, that of sales productivity.

Two: A True Demand Center
Everyone knows that a dollar of marketing budget doesn’t go as far as it used to, and that spending a dollar on new headcount instead of a program is difficult to rationalize. As a result, executives have begun to look for creative ways to drive leverage between activities across regions, business units and product lines, and to drive more measurable demand creation impact. An increasingly common move is to create a global programs or global campaigns group that will have the charter of bringing together some portion of disparate demand creation activities under one roof to be centrally created and distributed.

Three factors are generally at the heart of the struggles of global campaigns: lack of understanding of regional needs, the lack of a clear mandate from marketing leadership and a natural enemy in the form of the organization’s strongest region. For organizations that are based in the US or Canada, this comes in the form of NA marketing. The balance between a global group and a strong region can be particularly delicate, as the charge of the global group is to create and/or aggregate best-of-breed programs, offer them for consumption and act as a central clearinghouse for feedback and ongoing adjustments. At the end of the day, it is the marketing executive team that must decide if it will weaken its NA region in order to strengthen its central structure, or place worldwide “demand center” responsibilities within the strongest of regions. A halfway approach, however, will only wind up causing misery for everyone involved; if you truly want a strong global campaigns function, you must give it the power and the funding.

Next time I will expand on:
Three: Expanding Influence
Four: A Technological Crossroads

Peering Into the Marketing Crystal Ball - Part 1

At SiriusDecisions we have identified four key marketing issues that will receive significant attention in the upcoming year.

- Metrics, organizational balance and influence will all be key buzzwords for marketing leaders over the next 12 months.
- Technology is an important driver of marketing success, but must be supported by the proper process and leadership commitment.

As 2007 rolls to a close for b-to-b marketing executives, we can say one thing for certain: It is a year that has been all about the “more.” Whether it is more specialization, more technology or more of a commitment to the generation of new business pipeline, you can find some comfort in the fact that you’re not the only one feeling much more pressure. Next time, I will share four key areas that together will paint the picture of an even more changeable landscape in 2008. These areas include:

- One: The intersection of metrics
- Two: A true demand center
- Three: Expanding influence
- Four: A technological crossroads

The Ultimate Decision

The Promise:
It came upon us as a promise, wrapped in the innocence of simplicity. The inner core of a brand captured miraculously in a simple question.

“How likely is it that you would recommend us to a friend or colleague.”

The Net Promoter Score was born. The brainchild of Fred Reichheld, a Bain & Co. Fellow and Dr. Laura Brooks of Satmetrix Systems. The sort of material that Harvard Business Review writes their cases about. In fact HBR did publish an article in Dec 2003 with the eye catching title “The one number you need to grow”. The equivalent of a viral campaign unfolded, supplemented with a book… global speaking engagements.

Just as a black hole, the simplicity drew everyone to it. The promise, incubated by field studies at 400 businesses (turns out to have been 50+ in the end) which held that if we managed our customers properly – our business would grow. To do so only required our focus on customers who are either our promoters (scoring you a 9 or 10), passives (scoring you a 7 or 8) or detractors (scoring you 6 or less). Wait a minute – that’s all our customers. Exactly, but we’ll get to that again at the conclusion.

The Formula: % of Promoters - % of Detractors = Net Promoter Score (NPS)

Therefore if 50% of your respondents were promoters and 20% were detractors – you netted out at a score of 30. The higher the score the better.

NPS we were told would accurately predict a company’s ability to impress customers, turn customers into advocates, and -- in turn -- become an indicator of potential business growth. Scientific proof that this simple metric was ultimately more powerful and meaningful than any other management theory about customer satisfaction, customer retention, passion, loyalty or …well anything. So simple even a CEO could follow it ;-^)

And so the market embraced the theory. From all corners of the world. Heavyweights like GE (Real Estate division) Philips, HSBC, IBM (Enterprise Content Management), LEGO, Enterprise Car Rental, Intuit, Schwabb, American Express, Microsoft and others.

A simple approach, developed by respected accreditted professionals, endorsed by a world class university adopted by companies. What’s so bad about any of this?

The Questions:
Cracks in the foundation started to develop because of the lack of support to the contentions. Namely that the NPS was not a strong predictor, that there was evidense of research bias in the support used to substantiate the NPS and that the ACSI was not uncorrelated with firm growth..

“We find no support for the claim that Net Promoter is the ‘single most reliable indicator of a company’s ability to grow.’ The clear implication is that managers have adopted the Net Promoter metric for tracking growth on the basis of the belief that solid science underpins the findings and that it is superior to other metrics. However, our research suggests that such presumptions are erroneous. The consequences are the potential misallocation of resources as a function of erroneous strategies guided by Net Promoter on firm performance, company value, and shareholder wealth.”

Source: Timothy Keiningham et al. July 2007 A Longitudinal Examination of Net Promoter and Firm Revenue Growth

Other studies, other experts, opinion leaders, bloggers (see below) added their voices to the boisterous cacophony – worthy of the NYSE trading floor on a black bear day.

Undaunted, NPS supporters countered (see below) with their own assertions the NPS being as good as more complex measures and for the most part avoiding any direct discussions surrounding the statistical annomalies brought forward by Keiningham.

In this quote, Dr. Masden acknowledges being part of the team at the London School of Economics that vetted the NPS Score and asserts its ongoing validity as a reliable method of linking customer loyalty to growth.

"As far as the current debate goes, anyone who has read the information being disseminated from the “anti-Net Promoter” camp quickly comes to the realisation that the one Net Promoter question is, at the very least, just as good as more complex proprietary measures, that are tough to translate to the average executive and employee. But that leaves me questioning: why are we hung up on the measurement? The real conversation needs to be about how to get an organisation to be customer-centric and what that can mean for a company’s future”

Source: Clickadvisor.com on Sept 17 Net Promoter: the ultimate debate on customer loyalty

The Stalemate:

There is too much of an industry and ‘cult’ established around the NPS for it to dissapear on the basis of the allegations laid against them. In defence and defiance they point out that we are all ultimately pursuing the same path. True.

One can argue that the NPS may have accelerated the customer centricity movement, the other important benefit is that in its simplicity it has refocussed the dialogue on using metrics which can be widely disseminated and easily understood. Well in the words of Tim Keiningham

“ I too believe that loyalty consultants and researchers have over-complicated the message (and the analyses) with more advanced statistics than it took to get the Apollo space missions to the moon. It makes it impossible for management to understand, communicate, and rally support. This is ridiculous!”

The Ultimate Decision:
Believe it or not up to this point was the easy part. The hard part is deciding for yourself what happens next.

Will there ever be one metric to fit all needs? Highly improbable – and any contenders will not be allowed to make unsubstantiated claims. Instead of waiting for the new simple metric, we must continue to move forward with as simplified a system we can devise, implement and gain compliance with.

There are many competing schools of thought (Customer Experience Management, CRM, Loyalty/Continuity, Value Drivers, Image, WoM) reflecting the different successful business models/brands in the market.

To understand which approach will work best for your brand you must identify three things:

1. who your profitable customers are

2. what kind of relationship your profitable customers wish to have with your brand
a.Share of Wallet: the traditional CRM-centric make me a compelling (price/promotional) offer and I’ll buy it from you (or perhaps your competitors) – a brand relationship centered on the transaction.
b.Share of Mind: the traditional marketing promotions/communications approach – focussing on the key value proposition – a rational based brand relationship.
c.Share of Heart: Customer Experience Management – How people feel about the brand experience. Experience seen as a price mitigator and continuity reinforcer – an emotion based brand relationship.
d.Share of Life: How customers see the brand as a longer term partner for their category requirements, solutions and corporate/sustainability responsibility – an ‘adult/mature’ brand relationship.

3. within the relationship type identify the activities the enterprise must do to instill the longer-term repeat purchase pattern it seeks.

The key in my opinion is instead of defining your brand as an advocate of a particular ‘school of thought’ and then trying to mold your customers to fit within that model, we must instead look and manage this from the customer’s perspective. Therefore come to recognize the ALL of these relationship types exist simultaneously among different groups of your customers. What and how you communicate will be best served by understanding the type of customer they are first and from there make the ultimate decision as to how to relate and evolve with your customers.

Cheers
Miro

Suggested Reading:
NPS Adovcates:
The Ultimate Question. Driving Good Profits and True Growth. Fred Reicheld

www.satmetrix.com

www.netpromoter.com

Dr. Laura Brooks’s – VP Satmetrix latest blog posting

The Satmetrix white paper describing the research

Research conducted by the London School of Economics

Dr. Marsden from Clickadvisor.com on Sept 17 Net Promoter: the ultimate debate on customer loyalty

NPS Contrarians
Loyalty Myths: Hyped Strategies That Will Put You Out of Business and Proven Tactics That Really Work, Tim Keiningham, Terry Varga, Lerzan Aksoy, Henri Wallard

A Longitudinal Examination of Net Promoter and Firm Revenue Growth

The Value of Different Customer Satisfaction and Loyalty Metrics in Predicting Customer Retention, Recommendation, and Share-of-Wallet

January 2007 Maritz Research White Paper

COLLOQUY magazine article

Centralizing Customer Insight

Do you have low utilization of customer feedback; lack of systematic collection of sales insight about the prospect/customer base; lack a better socialization of customer dynamics?

A significant issue with market intelligence is that it has numerous customers, and as such, tends to be both unfocused and reactionary. Enter product marketing, with a charge to spend significant time studying both market and channel requirements on how products should be introduced, how the demand creation process can be accelerated and how the “voice of the customer” can be integrated into an all-too-often inward-looking product development process. As a result, I believe organizations can garner the greatest market intelligence contribution through projects commissioned by product marketing; as such, it should emerge as market intelligence's key customer, perhaps even assuming day-to-day responsibility for it.

Webinars – Made for the Multi-tasker in You.

Where else can you listen to an in-depth sales presentation, one that’s hopefully interesting, while you’re eating lunch, catching up on email, or writing out your grocery list?

I’ve attended five webinars so far this year and I have to say that for the most part, they’ve been a good use of time, in that I learned something new, put a company on our consideration list and in one case made a purchase.

Most customers and prospects attend webinars for a multitude of reasons, according to a 2007 study by Osterman Research – to get company product information, understand market dynamics, learn about industry trends, or learn about a vendor before making a purchase.

Like a cold call without the awkward introduction, webinars reach out to current customers and identify new prospects for a relatively low cost. If you don’t want to invest in the technology, there are lots of service providers to choose from that offer end-to-end solutions. But before you switch on the microphone, there’s a few practices you should follow to improve your odds for success and impress your customers big time.

1. Guest speakers can improve attendance – studies show that a well know industry name can increase attendance by as much as 60%. If you don’t have a keynote lined up, consider an exclusive offer or promotion as a way to generate interest.

2. Plan a rehearsal – it’s good to run through your presentation in advance and check for flow, timing and pace. Plus you should confirm the transition slides for each speaker. If you’re using a 3rd party service provider, understand any bandwidth limitations and how customers will be helped that encounter technical issues.

3. Promote in advance – Like other ‘direct response’ vehicles, generally speaking your current customer email and dmail lists will generate higher response rates than outside ones. Your sales force is also a great tool to identify and invite key customers to the event.

4. Collect relevant customer DNA – customers expect they’ll be asked a few profile and purchase intent questions when signing. But be brief and keep the list short. Ask only questions you don’t know answers to and make sure you have a plan that uses the responses after the event. Odds are your company dB is already bloated with unusable customer information.

5. Collect compatible customer DNA – don’t wait till morning to find out the prospect list you generated isn’t compatible with your customer dB. In some cases, webinar service providers will work with you to ensure information collected is compatible with your company’s internal database formats. However if you think you’ll be hosting webinars regularly, consider developing a sign up tool built specifically to integrate on your dB.

6. Deliver an exclusive offer to attendees – free product trial, a deep discount or another means to thank people for attending. Exclusive offers will also measure response rates and program ROI. Send invitations one week in advance too - and reminders the day before. Have a customer service number clearly visible to handle any attendee questions.

7. Limit the presentation to one hour max – and keep the pace at a moderately fast clip. Because you’re not seeing any visual cues (like yawns, bum shuffling, or blackberry-ing) in your audience to assess if your message is getting through, keep the subject matter moving along and of course, provide time at the end for a Q&A.

8. Ask for feedback – a BRIEF 3 to 5 survey delivered immediately after the webinar with only one open ended question is a good way to collect top of mind feedback from attendees. You’ll have a highly useful “did well/ do better” best practices list to aid in decision making the next time round.

Used correctly, webinars can be a highly effective method to deliver company and product information, and a very measurable marketing tool when paired with an exclusive offer or promotion. And of course, a most satisfying way for multi-taskers to spend time over the noon hour.

Prepping Salespeople for Battle

In a recent conversation with a marketing executive he recognized in his organization there lacked a strong connection between product marketing and sales, and that there was a lack of leverage/socialization of product marketing knowledge.

Every b-to-b organization should create and adhere to a “product launch model,” where it formally sets out the support that will be provided to the sales team upon the launch of a new product or service. This support commonly includes training materials, sales materials, public relations releases and any investor relations-related documents. It also should include what many organizations are referring to as “battle cards,” or competitive information/comparison sheets. These battle cards should include common competitors the salesperson can expect to run across; features of competing products/services; and key differentiators. Over time, these battle cards should be revamped to include additional competitors not initially identified; common sticking points that salespeople have experienced; typical “audiences” that bring up the objection; responses that have worked to ease the objection; and responses that have failed to ease the objection. This fairly simple deliverable can open up a regular, candid dialogue between sales and product marketing, and help product marketing to augment its initial support plan for new products and services.

What's In a Name?

As the b-to-b world has moved seemingly in unison away from wanting to be viewed as “product-based” to “solution-based,” confusion has grown as to where this leaves product marketing. Even when an organization can complete the difficult journey of moving from product to solution, that doesn't mean that product transactions will disappear; in fact, a “solutions” organization will still likely conduct about a third of its overall business in a purely product-focused manner.

To reflect this mix, I am starting to see organizations refer to their product marketing function as “portfolio marketing,” as it better reflects the reality of the mix of product, solution and even segment-based marketing that will be considered optimal in the quarters and years to come. This subtle move of renaming a product marketing group in this fashion is actually quite significant. It allows existing structures to be placed under a new umbrella, professes that there still is very good reason to continue to do business as they have been doing in the proper circumstances, and demonstrates that the organization is committed to developing a more comprehensive structure and tactical plan where it is warranted.

Teleprospecting Specialization

I see this happen more often than not; inconsistent telemarketing/teleprospecting output, difficulty in finding adequate inside resources, and increasing friction between inside/outside sales.

As inside sales bears more of the overall burden of demand creation, professionals within the function are feeling the brunt. I continue to see individual inside reps responsible for telemarketing, teleprospecting and telesales, not to mention acting as de facto sales support resources. The skills required to be an effective teleprospector are vastly different from these other jobs, and often do not transfer well. Teleprospecting also demands a laser-like focus to generate consistent results, a focus that is not possible when tasked with numerous other jobs. Teleprospectors should be uniquely hired, trained, managed and measured, and should be kept on task for maximum productivity. Telemarketing requires much less skill; thus, it is a perfect candidate for offshoring or farming out to a third-party resource.