The Outbound Index: September 2013


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Inbound, inbound, inbound. It's all we hear in the marketing and sales world. But our CEO Peter Gracey paired with The Bridge Group Inc. to find out if outbound really is, as they say, moot in this social age. The results are astounding, and presented in a way that both makes sense of statistics and points to the future of outbound vs. inbound prospecting. Pete Gracey delivers the results with a mixture of aplomb and humor. The Outbound Index is a must-read for sales professionals, and it provides ways for other companies to benchmark their own outbound efforts. If you want to see the accompanying infographic, visit this webpage:

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The Outbound Index: September 2013

  1. 1. OUTBOUND INDEX Issue #2 – September 2013
  2. 2. OLD MAN: I'm not dead. CART DRIVER: What? LARGE MAN: Nothing. There's your ninepence. OLD MAN: I'm not dead. CART DRIVER: 'Ere, he says he's not dead. LARGE MAN: Yes he is. OLD MAN: I'm not. CART DRIVER: He isn't. LARGE MAN: Well, he will be soon, he's very ill. OLD MAN: I'm getting better. LARGE MAN: No you're not, you'll be stone dead in a moment. CART DRIVER: I can't take him like this. It's against regulations. Monty Python and the Holy Grail < 2 >
  3. 3. Outbounding isn’t needed. Your buyers are in the driver’s seat. You’ll alienate more customers cold calling than you’ll earn. This is what we are constantly being told. So we decided to put the claims to the test. For first-time readers, we created the Outbound Index™at the end of 2012 to provide the Sales and Marketing world with the first ever benchmark of outbound prospecting efforts for B2B technology companies. Providing a bi-annual snapshot of the effectiveness of outbound prospecting, the Index is powered by actual, transactional CRM data. < 3 > PREFACE
  4. 4. With each release, we’ll be sharing results from the previous two quarters. So buckle up. For regular Outbounders, feel free to skip ahead to IN THIS RELEASE (page 11). RIDDLE ME THIS: If Outbound has one foot in the grave, how would you expect the results of outbound prospecting to change from the first half of 2012 to the first half of 2013? Down 5%? 10%? 40%?!?! Those on the conference stages might expect as much. < 4 > PREFACE
  5. 5. But those on the phones won’t be surprised to hear: Year over year, the state of Outbound has improved dramatically – up 35%. In the words of Simple Minds (and at the risk of dating ourselves), outbound is “alive and kicking.” Or more to the point, thriving and improving. In the following chapters, we’ll try to hold true to our mission of picking up where traditional top of the funnel studies leave off. We’ll focus on what happens when Business Development Reps pick up the phone and prospect to generate sales pipeline. < 5 > PREFACE
  6. 6. Matt Bertuzzi The Bridge Group, Inc. Data Guy & Number Cruncher Pete Gracey AG Salesworks Pundit & Prognosticator With each release it is our sincere hope that we not only give you food for thought and a benchmark to consider, but also that we convince you to run your own Outbound Index and calculate where your team stands. We hope you find it useful and actionable. < 6 > PREFACE
  8. 8. The Outbound Index is an indicator of the return on outbound prospecting efforts. We are looking to answer the question: Out of 1000 accounts prospected in a given quarter, how many opportunities should enter pipeline? For example, an Index of 25 would mean that for every 1000 accounts your BDRs target in a given quarter, 25 should enter your sales organization’s pipeline. We mean ‘enter pipeline’ in the most concrete way – an opportunity has been generated and Sales has accepted ownership. < 8 > WHAT IS THE INDEX?
  9. 9. The Index is based on actual transactional CRM data. In the first half of 2013, , our cohort of BDRs prospected across: • 50+ technologies • 270k+ touches • 13k+ prospect conversations -and- • $62M+ in new pipeline generated We are blessed with a level playing field in terms of the methodology, process, CRM, nomenclature, etc. used by our cohort of BDRs. Note: Average Deal Sizes for the B2B technologies included in the Index range from $80-150K. < 9 > WHERE DATA COMES FROM?
  10. 10. In addition to our Headline Index, we tracked three KPIs. Reach– the percentage of targeted accounts that engage in at least one meaningful, forward-progressing sales conversation Pass– the percentage of reached accounts that are passed by a BDR to a Sales counterpart < 10 > OUR KPIS Pipeline– the percentage of BDR-passed accounts that are accepted into Sales pipeline
  11. 11. In this release, we’ll cover: Chapter 1. How is outbound doing? If you target 1,000 accounts, how many qualified opportunities should you be putting into your sales organization’s pipeline? This is our “headline” metric. Chapter 2. What is selling now? We break down the Index into categories of technologies to determine the “winners” and “losers” from last quarter. What types of B2B tech are moving forward the fastest? Which ones are lagging behind? < 11 > IN THIS RELEASE
  12. 12. Chapter 3. Who is converting to pipeline? We investigate conversion rates by title/seniority to determine which categories of buyers are most prospect-able. Who are the change agents? Who are the brick walls? How does that compare to previous quarters? Chapter 4. Retrospective & Predictions Big picture, what happened last quarter? We also make predictions as to what we expect to see next quarter. < 12 > IN THIS RELEASE
  14. 14. The Outbound Index in the second quarter of 2013 was 42. By way of comparison, the Index from our last release (Q4 2012) was 32. Over the last 2 quarters, the Index has improved by a whopping 31%! So what exactly does this mean for B2B technology companies? For every 1000 accounts prospected last quarter, our cohort of BDRs generated 42 opportunities that entered sales organizations’ pipelines. As we dive more deeply into the data, you’ll notice that the majority of the hockey stick effect came in Q2 of this year. It was an epic three months for Outbound. HEADLINE INDEX < 14 >
  15. 15. To put this number into perspective, let’s wrap some dollars around it. Assume that you are a B2B technology company with an average ticket of $50k. For 1000 accounts prospected in Q4 2012, your BDRs would have sourced $1.6M in sales pipeline. Fast forward to Q2 2013, those same efforts would have sourced $2.1M in sales pipeline. Let’s take a closer look at the first half of 2013 to see if we can get a feel for what the heck happened. Q4 REBOUNDS < 15 > HEADLINE INDEX
  16. 16. The first quarter of 2013 greatly resembled the first quarter of 2012. In a word, sluggish. When we calculated Q2’s results, we noticed a jump. A big jump, in fact. From Q1 to Q2 of this year, the Index posted an incredible 27% increase. What caused this? Over-indulgence at New Year’s parties, leading to extremely slow buyer performance at work? Great snow accumulation in the North East pulling decision makers to the slopes and out of the office? All incredibly insightful hypotheses, but we gain even more clarity by looking at our three KPIs and the long-term trend. < 16 > Q2 – ONE FOR THE AGES
  17. 17. You may recall from Issue #1, that Q3 2012 was (and remains) the single toughest quarter we’ve observed in terms of our 1st KPI - Reach Rate. Q3 2012 posted a reach rate of 27.9% - just abysmal. This chart presents the long-term trend. (Note: to smooth out the varia- tions, we’ve plotted 3-quarter moving averages.) You’ll notice that through late 2012 and into early 2013, the moving average shows a steady decline in Reach Rate (a very concerning trend). < 17 > KPI #1: REACH
  18. 18. In Issue #1, we predicted that 2013 would show slow growth with a big bump coming by year’s end. We attributed this to a business hangover felt by many decision makers after a stormy 2012. We’re happy to report that Reach Rate rebounded convincingly in Q2 2013 - posting a strong 40% and pulling up the moving average. < 18 > KPI #1: REACH
  19. 19. The long-term trend is towards increased prospect willingness to engage (Pass Rate +19%), with a slight drop in the amount of interest leading to Pipeline (Pipe Rate -2%). Simply put, Decision Makers are suffering from cold feet. They are increasingly open to learning about alternatives and new approaches. But when it comes time to enter the buying/selling process, they hesitate. They claim no budget or that initiatives are being pushed to the next quarter. The falling Pipe Rate isn’t too concerning (yet). We expect opportunities that missed the pipeline this quarter will soon realize they may be able to buy something after all. BDR research and outreach will begin again. Leads will be passed. And accepted opportunities will be created. < 19 > KPI #2 & #3: PASS & PIPE
  20. 20. WHAT IS SELLING NOW?2.
  21. 21. It’s been an interesting 2013 so far for a number of technology categories. Let’s first look at the technology with the toughest Index, ERP/CRM. BDRs trying to generate pipeline for ERP technologies continued to beat their heads against the proverbial “wall” INDEX BY CATEGORY < 21 > with a precipitous 27% drop in Index year-over-year. ERP is a saturated market, as we all know. What we’ll say to you ERP BDR’s out there is, “Keep your heads up.” We did see an increase in Index in the second half of last year. Perhaps it’s a buying cycle thing.
  22. 22. Marketing & Sales related technologies continued to skyrocket with a 49% increase in Index year-over-year. What we love most about the Index is the ability to correlate. When you review what happened from a Reach, Pass, and Pipe standpoint this year, you can assume that since buyers are looking to make technology purchases again, their companies are focused on growth. Companies looking to grow are naturally going to want to invest and support initiatives around Marketing and Sales (including technology). Conversely, when companies are contracting, their initial reaction is almost always to back burner initiatives in this area. INDEX BY CATEGORY < 22 >
  23. 23. WHO IS CONVERTING?3.
  24. 24. A LOOK AT SENIORITY < 24 > In Issue #1, we noted a substantial increase in Managers being given more responsibility in the process of technology review and selection. CxOs were too busy, and Directors roles were vacant. (We noted a high degree of turnover at the Director-level late last year.) The strong rebound in the first six months of this year has been accompanied by a return to a more normal spread of KPIs across target organizations. Once again, we can see the direction things are heading by looking at the year-over-year change in Reach Rate.
  25. 25. KPI #3: PIPELINE < 25 > The decrease in Manager-level Reach Rate was very much driven by the increases in access to CxO and Directors. Year- over-year, the CxO Reach Rate increased by 40%+. Staggering! When 40% more CxOs are having meaningful conversations already this year, it can only mean great things for closed business later on. Director-level Reach Rate also increased significantly by 24% year-over-year. The greatest driver of this increase is that companies are filling Director-level positions again. There are simply more Directors in their seats thinking about the future. Filled roles, a more positive outlook, more conversations, and aggressive Outbounding capitalized to drive many more Director level conversations. A LOOK AT SENIORITY
  26. 26. KPI #3: PIPELINE < 26 > This ‘upstream’ shift in Reach Rate has yet to have an impact on who is showing up on the Sales forecast. As noted above, the long term trend for Pipe Rate is downward. This was especially true at the Director-level. The Pipe Rates for CxOs and Managers remained relatively unchanged. A LOOK AT SENIORITY
  27. 27. < 27 >
  28. 28. < 28 >
  29. 29. < 29 >
  31. 31. We at The Outbound Index™are extremely optimistic about the second half of this year. We felt that the strong Q4 from 2012 wasn’t an anomaly, but a harbinger of good Outbounding to come. Thus far, we’ve been proven right. However, before we all pack our bags for the President’s Club Trip, here are three things to be watching for as we close out 2013. 1) Don’t Avoid The Managers. Hallelujah, The CxOs, VPs, & Directors are talking to us again. It’s good news for everyone as the senior contacts can only accelerate your sales process. < 31 > CONCLUSION
  32. 32. That being said, and we repeat from last Index, ignore the Managers at your own peril. Things can change on a dime in our economy and you could soon be back in the position of relying on these folks to support (and fill) your funnel. If you don’t keep calling them now, you stand the chance of being left out in the cold if things change quickly. Increase your databases to include three contacts at every company you are prospecting as a rule. A Manager, a Director, and a C-level or VP should be the triumvirate you have for each company in play. Spread your activity out evenly through a regimented call plan across all three titles to hedge your bets against the great wild cards: the Economy (Pete’s opinion) and/or Irrational Humans (Matt’s opinion). < 32 > CONCLUSION
  33. 33. 2) Work Harder. There is no better time to put the pedal to the floor than when you are already cranking. Yes, things are looking good and we are excited... All the more reason to pick up the pace. Increase your per rep conversation requirement by 1 per day. You’ll be glad you did. The economy of scale you gain from having your whole team engaging in 1 extra conversation per day will either drive your Pipeline through the roof or keep you covered in the event that the market takes a step back. < 33 > CONCLUSION
  34. 34. 3) Track No Interests. One of the easiest ways to get a feel for the pulse of your marketplace is to track the reasons why companies aren’t interested in what you do by Seniority. Look at the changes in that category for 2012 and 2013. < 34 > CONCLUSION
  35. 35. Last year, CxO were using “Delegation” to a manager to get us off the phone, because there weren’t any directors. Managers were claiming to be “overwhelmed” by extra responsibility to give you the time of day. What did all of this mean? It meant that things weren’t great and people were in survival mode. When you look at this year, you still see that “Delegation” is still the main way a CxO gets you off the phone. The difference now is that they are passing you down to a Director because they have one again. For Directors, the biggest reason for not being interested is “Competitor in Place,” and for Managers, the reason is “Not the Decision Maker.” What does this tell us? Things are getting back to normal. When you are going to lose a deal, this is how it should go. You don’t get a deal because someone else already did one. It’s a beautiful thing. < 35 > CONCLUSION
  36. 36. A great start to the year and some very encouraging leading indicators for all of us heading into the second half of 2013. Outbound is looking healthy again and many deals are filling the pipe as we speak. Where we see some similarity to last year is the wild increases in Index from quarter to quarter, and for that reason we proceed with some caution. Summer is traditionally slow, and while we firmly believe things are trending for a big Q4, we do expect the index to decrease slightly in Q3. We attribute this to seasonal normality instead of economic conditions. We look to see substantial increases in CxOs and Directors converting to Pipeline, as many more were passed to sales in Q2. Conversely, the number of Managers converting to Pipe will continue to drop for the rest of the year as they enjoy less decision making responsibility. < 36 > CLOSING THOUGHTS
  37. 37. Advice: • Drive Pass Rate in Q2. Run every spiff around this KPI to drive Q4’s deals. • Don’t ignore the managers, you may still need them. • Craft 3 separate outbound messages for each level of seniority to engage them more meaningfully at the outset. This pushes them to pipe faster. • Recycle your Q1 leads that didn’t convert in Q3 and Recycle your Q2 leads that didn’t convert in Q4 < 37 > CLOSING THOUGHTS
  38. 38. Q4 will be another busy quarter as Outbound teams fill the funnel for Q1 2014. We expect that the Index will again approach it’s Q2 level with particular increases in Director Level Passes and Conversions to Pipe. CXO Reach Rate and Pass Rate will decrease in Q4 due to other focus, but Manager Reach and Pass rates will increase. Stuff flows downhill and as CXO’s have to spend time elsewhere, that will invariably result in lower levels picking up some of the slack. We believe the biggest reason companies won’t be interested in being passed in Q4 will be “Q1 2014 Initiative”. < 38 > CLOSING THOUGHTS
  39. 39. Advice: • Drive reach rate in Q4 to replenish your pipeline that was most likely exhausted in Q3. . • Prep your team for the “Q1 2014 Initiative” blow off with precise and effective messaging designed to get prospects to commit to a time now. The state of Outbound is as strong as it’s been in years. It may be contrary to what you are told, but the staggering increase of the Outbound Index™year over year is all the evidence that you need. < 39 > CLOSING THOUGHTS
  40. 40. Remember, the point of this Index isn’t to throw numbers at you, but to get you thinking about how to measure, benchmark, and manage your own Outbound Team. We look forward to your feedback and to helping you create your own Outbound Index™. Yours in outbound, Pete & Matt < 40 > CLOSING THOUGHTS Matt Bertuzzi The Bridge Group, Inc. Pete Gracey AG Salesworks
  41. 41. RATE FLUCTUATIONS < 41 > Demand is subject to human nature and humans don't heal easily. Though summer time, the living was far from easy in 2012. Just as folks began to move back into buying mode we were all introduced to the term ‘fiscal cliff.’ It's natural to assume that there may have been some residual cold feet amongst these stakeholders. It's also natural to assume that as your company moves forward with some degree of trepidation that you, the mid- level Manager/Director would practice a little CYA and slow down that big purchase you were working towards.
  42. 42. LOOKING FORWARD < 42 > Advice: Be patient. These folks haven't had the best 4 years. Spending other people's money lost its luster in 2008. Be courteous and accept the elongation of your sales cycle. It's OK, watch the trends (as we'll discuss later) and assume that these wafflers are going to come around by mid-2013 and hop into your pipeline.