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Generating demand for high-tech b2b products


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Buyer behaviour in complex B2B sales has changed dramatically in the past 5 years. In this white paper we look at the characteristics of high-tech B2B sales and marketing and what you should do today …

Buyer behaviour in complex B2B sales has changed dramatically in the past 5 years. In this white paper we look at the characteristics of high-tech B2B sales and marketing and what you should do today to generate demand for your technology products and services.

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  • 2. Generating Demand for High Tech B2B SalesEXECUTIVE SUMMARYBuyer behaviour in complex high tech B2B sales has changed dramatically in the past 5 years. More of thebuying process is happening online and more of it is controlled by customers. Vendors need to understand thenew dynamics and adapt their sales and marketing organizations accordingly if they want to succeed.In this whitepaper we look at the specific characteristics of complex high tech B2B sales and marketing; wereview how B2B marketing has changed in the era of digital marketing; we show how companies shouldgenerate demand today; and we outline how the marketing and sales units at B2B firms should address thenew environment.REENGINEERING SALES AND MARKETING FOR A NEW ERAThe high tech B2B sale has some unique characteristics: generally higher average value, longer sales cycles,and a number of participants in the purchase process. And it is increasing in complexity. Buyer behaviour inB2B has changed dramatically in the past 5 years as the internet redefines how companies buy goods andservices. Buyers are doing most of their initial research online before initiating conversations with vendors andare better informed at an earlier stage. Buyers are also more difficult to reach because of the increasingvolume of electronic communications they receive. Traditional marketing and sales techniques are lesseffective for these reasons. Were moving from a focus on outbound techniques like press advertising, mailshots and cold calling, to inbound techniques based on websites, online ‘pay-per-click’ advertising and‘content-based’ marketing. The changes present a threat to companies who dont adapt quickly to the newenvironment, but they offer a huge opportunity for those who learn how to use their online presence togenerate demand effectively. The real promise of the new era of marketing and sales is the ability to useautomated, repeatable processes to scale up the generation of high-quality sales leads - what we call demandgeneration – leading to corresponding increases in sales conversions and revenue.WHAT IS A COMPLEX, HIGH TECH B2B SALE?A Complex B2B sale is one in which there is a long and complex sales process that requires sustainedinteraction with the client buyer organisation. Some of the common characteristics of a Complex B2B Saleinclude: • High-value, high-consideration – the average deal size tends to be high, which means there is a greater perceived risk on the buyer side. • Complexity of the product or service – often what is being sold is complex, which means there is a need to educate prospective buyers on its particular features, merits and competitive differentiators(c) DohertyWhite 2010 Page 2
  • 3. Generating Demand for High Tech B2B Sales • Extended, multi-phase sales cycles – the sales process doesn’t follow a linear path; there are different phases with different requirements at each phase; and the end-to-end length can range from 3 months to 2 years or more • Multiple participants in the buying decision – there are different decision makers and influencers at each stage of the sale, with different needs and constraints • Increased Executive Selling – most complex sales require sign-off from someone at senior executive level, and they may be involved at earlier stages in the evaluation process too • Increased Demands on Sales People’s time – sales people have to invest huge amounts of time in developing their key prospect accounts. This means they do not have time to chase after low-quality sales leads and it restricts the time they can allocate to developing new opportunities.Since the mid 1980s a number of methodologies have been developed to help guide sales teams throughcomplex sales, most notably the Miller Heimann “Strategic Selling” 1 approach, which emphasizes a deepunderstanding of the roles in a buying organisation. While still useful, these approaches have two seriouslimitations: they do not address how marketers should work with sales teams when generating leads for thetop of the sales funnel and, more importantly, they don’t address the very significant impact the Internet hashad on B2B buyer behaviour.THE INTERNET AND THE B2B BUYING PROCESSToday, whether someone is buying a plane ticket, a house or a new software system, the search begins online.In complex B2B sales, more of the process also happens online, and more of it is controlled by customers, notyour sales teams. US research firm MarketingSherpa reported in a 2008 survey of buyers of technologysolutions worth $50,000 or above that over 80% said they found the vendor in their purchase rather than thevendor finding them2. Buyers now typically initiate their research online before launching a formalprocurement process. This means that by the time your sales staff meet a potential buyer face-to-face thatbuyer will already have visited your website, downloaded your product information, looked at competingvendor sites, checked your analyst ratings and studied comments on blogs and social networks. You may beexcluded from a buyer’s short list without even being aware that a procurement was underway. Or worse still,you may not have featured on the list because the buyer wasn’t aware of you. With large markets, long salescycles, and multiple individual buyers and influencers, no company can hope to reach them all directly or atthe right time using outbound methods. You need to use inbound marketing to make sure you’re found firstand found early.1 The New Strategic Selling, Robert Miller, Steve Heiman et al, ISBN-10 07494413052 MarketingSherpa B2B Technology Marketing Benchmark Report 2008(c) DohertyWhite 2010 Page 3
  • 4. Generating Demand for High Tech B2B SalesThe complexity of the average decision process has also increased. According to the standard marketingmodel, the business buying organisation can be thought of as a ‘black box’, with certain stimuli (inputs)resulting in certain responses (outputs)3:According to this model, for any given procurement, the buying process follows a predictable path from ‘needrecognition’ through to selection of a given vendor 4:But in reality the buying process is not a linear, step-by-step process, and the tougher economic environmenthas increased buyer risk aversion. Average sales cycles are lengthening – in a survey of complex B2B sales,23% of these sales took 7 to 12 months to complete in 2008 versus 15% in 2005, according toMarketingSherpa5. This means when prospects first enter your pipeline they may be months away from apurchase decision, so you need to identify ways to maintain an ongoing relationship with them while waitingfor them to move into ‘buy mode’. The number of participants involved in a purchase also continues toincrease, reflecting organisational risk aversion, with an average of 13.5 people being involved in a purchaseworth over $25,000 in companies of 500 to 1000 employees 6. The longer sales cycle and large number of3 Adapted from Kotler et al, “Principles of Marketing”, 2 nd European edition, p. 2824 Adapted from Kotler et al, “Principles of Marketing”, 2 nd European edition, p. 2945 MarketingSherpa Technology Marketing Benchmark Survey April 20086 MarketingSherpa Business Technology Buyers Survey March 2007(c) DohertyWhite 2010 Page 4
  • 5. Generating Demand for High Tech B2B Salesparticipants make it increasingly difficult for sales teams to identify the key influencers on the buyer side andto control the overall outcome of the process using traditional approaches.HOW B2B COMPANIES GENERATE DEMAND TODAYIn most companies with a Complex B2B sale, the Sales unit has held primary or sole responsibility for leadgeneration, with Marketing providing a supporting role. Sales teams rely on their personal and professionalnetworks to identify prospects and occasionally use telesales as a way to root out additional opportunities. Insupport, B2B Marketing units have traditionally used a range of ‘outbound’ techniques to help generate leads,including tradeshows, print advertising, telemarketing, seminars and direct mail. There are three mainproblems with this approach: • It ignores the new buyer behaviour – relying on cold calls and direct mail assumes you know who to call or mail to begin with. But, as we’ve noted, it’s unlikely you will know the full range of participants in a B2B procurement at your target prospects, or all companies at which a procurement is underway. • It is inefficient – many direct outbound marketing techniques assume very low response rates e.g. 2% to 5% responses for a broadcast email campaign. In cases such as print advertising in trade journals there is no accurate way to gauge the response rate. This means that over 90% of promotional activity may not be reaching an appropriate recipient. • It is disjointed – typically there is a lack of alignment between sales and marketing in many B2B complex sale companies. Sales are under huge pressure to deliver results (new sales) and feel that the leads marketing produce are of low quality, causing them to waste time chasing ‘red herrings’. Marketers in B2B firms are often frustrated because they devote time and money to lead generation activities only to see the resultant leads dropped or ignored by sales teams. The result is two teams, both of which are vital to the success of the organisation, who mistrust and misunderstand each other.A NEW APPROACH TO GENERATING DEMANDThe new buying process requires a new approach to sales and marketing, one that aligns the sales andmarketing teams, reflects a deep understanding of the buyer and uses digital marketing tools to support leadgeneration.As with older approaches to sales and marketing, the new form of B2B Demand Generation can only besuccessful if you really understand your buyers and your value proposition is clear. Digital demand generationfor business-to-business complex sales must start with the buyer, what they want, who they are, how theybuy. Following from this understanding you must then articulate your “value proposition” for these buyers –(c) DohertyWhite 2010 Page 5
  • 6. Generating Demand for High Tech B2B Saleswhat you do, why it’s important, how you do it. Once you have your buyer analysis and revision of your valueproposition complete you can then use digital tools to raise awareness and generate leads.To execute an inbound B2B marketing strategy, companies draw potential buyers to them online by providinga range of relevant offers, such as research papers, industry surveys and buyer guides. Offering usefulbusiness-oriented content lets you demonstrate your worth to prospective customers, eliminating buyeruncertainty and establishing a relationship. In exchange for that content you capture some basic contactdetails from the visitor and use this information to begin developing a profile for each ‘lead’. You identify thevisitors most likely to be of interest using data such as their geographic location, company name and socialnetwork profile, and encourage those visitors to continue interacting over time, gaining further insight into theperson’s stage on the buying cycle at each interaction. When a particular contact meets some predefinedcriteria or ‘trigger’ to indicate they are entering the buying stage, the lead is passed to the sales team, alongwith the lead’s interaction history.The main elements in the new approach are: • Agree responsibilities – in our view lead generation is best handled by your marketing team, letting sales staff concentrate on selling to genuine opportunities. • Agree a common lead definition – Marketing and Sales should agree what constitutes a sales-ready lead. This could be characterised by company size, revenues, location, industry sector. Having this conversation is the first step in aligning the activities of the Marketing and Sales units so they both reinforce each other.(c) DohertyWhite 2010 Page 6
  • 7. Generating Demand for High Tech B2B Sales • Understand your buyers – Identify the people involved in the buying process, their specific needs, their role in the decision making process, and the kinds of organisations you are targeting so you can build a picture of the key players and the buying process in a typical sale. • Create compelling offers – based on your knowledge of your buyers and what interests them, create ‘content’ that will attract them to your online presence. In B2B complex sales this content typically includes case studies, white papers, webinars, recorded demos, online videos, analyst reports, buyer guides and ‘how to’ guides. • Drive buyers to you online – again based on your knowledge of typical buyer organisations, use the full range of available digital tools to drive relevant traffic to you online. Use Google pay-per-click ads, Search Engine Optimization, ‘opt-in’ email campaigns, social networks, online PR and other methods to build a constantly increasing stream of visitors to your website. In addition, continue to use selected ‘offline’ promotional methods such as direct mail shots and high impact trade shows to reinforce the online program. • Capture contact details – in return for offering buyers high quality content such as an analyst report, request some basic contact details from them such as their name and email address. You can then use this information to do a first-pass assessment of the visitor e.g. which company they come from, which geographic location, whether they have a profile on LinkedIn etc. If they have visited your site before, you can begin tracking their history of interactions with you. • Filter your contacts, sell to the hottest, nurture the others – based on the profile of the contacts and your agreed lead definition, you can identify those that are of greatest interest. Qualify those leads that seem to have potential (e.g. by having a telemarketer ring to ask what their interest in the solution is). Any leads not yet ready-to-buy but who fit the target profile should be placed in a program of regular follow-up communications to ensure you stay front-of-mind.By adopting this process-centric, online marketing-based approach, you are now much more likely to catch thebroad range of participants involved in a B2B purchase. You are also making more effective use of your time –rather than calling one hundred people in the hope that three will answer as in the old approach, you are nowpursuing contacts who have already indicated an active interest in what you have to sell. Instead of havingsales staff pursue low-grade ‘red-herrings’, you are qualifying all contacts using agreed criteria and onlyhanding sales-ready leads to your team. You can see what you get for your money too – with online leadgeneration you can match up every dollar spent with the results, often within minutes or hours, letting youdecide which tools are most effective at generating high quality leads. Finally, this approach is easy to scale-upwithout having to increase headcount. You can automate email follow-up campaigns, run multiple Googlepay-per-click ads and your web-site can capture visitor details 24 hours a day, 7 days a week, all withoutintensive manual input.(c) DohertyWhite 2010 Page 7
  • 8. Generating Demand for High Tech B2B SalesBUILDING A DEMAND GENERATION MACHINEMany B2B companies suffer from an unpredictable flow of leads and from leads of varying quality. As salesslow down or stall, these companies tend to focus on the bottom end of the sales-funnel to find solutions.Should we change our sales pitch? Should we change our product demo? Should we retrain our sales peoplein strategic selling? Should we change our sales team?These problems should be addressed by developing a set of processes within sales and marketing thatgenerate a constant and predictable flow of leads. Creating and nurturing leads through automated demandgeneration processes using digital techniques will ultimately result in more deals and a higher conversion rate.Demand Generation should be treated as a key operational process, in the same way companies have definedprocesses for product development or financial management. The objective is to build a ‘machine’ thatproduces a predictable and repeatable flow of leads of standard quality each quarter.The first step in building this machine is to ensure both sales and marketing understand their respectiveresponsibilities. While Marketing covers a broad range of activities, in complex B2B sales a key responsibility isto generate leads. Likewise, the function of the Sales department is changing, with more focus on selling tokey opportunities and less time spent on prospecting and chasing cold contacts. The Sales team should look atMarketing as the people who fill the top end of the sales funnel. In future the division of responsibilitiesbetween Sales and Marketing will become blurred and the two will share a more clearly defined collectivefocus.With Sales and Marketing aligned, the next step is to implement processes and tools to generate and thenmanage leads. This means setting up online lead capture, coordinating email marketing campaigns, managingpay-per-click advertising programs and integrating all of these so that all leads are captured and scored in aconsistent way. A new category of software, Marketing Automation systems, is being used to support thecreation and management of these kinds of processes.(c) DohertyWhite 2010 Page 8
  • 9. Generating Demand for High Tech B2B SalesImportantly these processes should focus not only on generating new contacts and inquiries, but also on‘nurturing’ those leads that aren’t sales ready, which in our experience is about 75% to 80% of all leadsgenerated. Using digital tools to nurture leads who are either very early stage or just not ready to buy will paydividends. According to a report by BPM forum, over 80% of generated leads are never followed up, or aredropped or mishandled. 7 Given that Forrester Research has estimated that on average it costs $100 togenerate a lead in B2B, this is an expensive waste 8. A Yankee Group report also found that an 11% reductionin dropped/lost leads combined with a 1% improvement in lead-to-order conversion increased gross annualprofits by 136%9. All of this suggests that it makes financial senses to systematically manage other leads thatare of interest but which haven’t yet moved into the buying phase.CONCLUSIONBuyer behaviour in B2B has changed dramatically, reflecting the impact of the internet on the way companiesbuy goods and services. Buyers are doing more of their research online; they are also more difficult to reachdirectly; and traditional marketing and sales techniques are less effective as a result. Your aim is to connectwith as many buyers as possible who are just starting to identify the need for a solution so you can influencetheir needs and establish yourself in pole position as a candidate supplier. For companies wishing to achievescale internationally, inbound marketing will help you establish contact with, and nurture, more buyers thanwould be possible using outbound methods. B2B complex sales organisations should adopt a new approach togenerating demand, one that aligns the sales and marketing teams, reflects a deep understanding of the buyerand uses digital marketing tools to support lead generation. Apart from improving demand generation in theshort term, the real promise of this new approach is the potential to automate repeatable processes that drivefaster and more predictable revenue growth.7 BPM Forum, “Gauging the Cost of What’s Lost”, 20048 Laura Ramos, Forrester Research, “Lead Generation Costs”, 20079 Quoted in Stephens, Craig, “Streamlining Sales”, BtoB Magazine 88, no.4 (2003):7(c) DohertyWhite 2010 Page 9
  • 10. Generating Demand for High Tech B2B SalesCONTACT US AT:Donegal: Colab Letterkenny Institute of Technology Letterkenny Donegal IrelandWebsite: www.dohertywhite.comPhone: 353 7493 81986Mobile: 353 86 383 8981Dublin: 50 Sycamore Road Glasnevin Dublin 11 Ireland(c) DohertyWhite 2010 Page 10