To Choose Where You Play in the Market: Know Your Buyers Well

What do MBAs need to know about Buyer Behavior?

During the past couple of years, I have had the wonderful opportunity to guest lecture at my alma mater, Santa Clara University, to new classes of MBA students. This is something I do twice a year at most, and I love to give back to the business school that kick-started my career in marketing.  My topic is Buyer Behavior and why it matters in B2B focused organizations, where keeping a direct sales force — or channel partners — happy and productive often becomes the primary focus of the marketing organization.

Tomorrow night, I will attempt to impart words of wisdom to Professor Ravi Shanmugam’s next class of unsuspecting scholars.  As always, I will ask them to share their reactions to my presentation by commenting on this blog post. Most Santa Clara MBA students are employed full-time at top Silicon Valley firms and many hail from technical or engineering backgrounds.

Which will make for interesting discussion, since my comments tomorrow evening will focus a bit more on the healthcare industry. I plan to talk about how — in my new role this year heading up industry marketing across Xerox – we are making online, social, traditional and (frankly) unexpected moves in this industry.  Unlike high tech, this is an industry where Xerox is better known for supplying copiers used at the nurses’ station or admissions desk than for solutions we bring to hospitals, insurance companies, government agencies and employers to help them simplify how each manages the health of its respective populations.

Segmentation, personas, and behavior profiling continue to be the tools that good marketers use to understand how and communicate why buyers purchase from technology suppliers. Increasingly, these tools also help marketing executives determine where to head in a strategic direction (e.g.  grow current solutions versus invest in new ones), define how an organization uniquely creates value and plan how – through market execution – to deliver that value to customers.

Today, I think many B2B marketers stop at segmentation and targeting when they answer the question “what type of buyer should we attract?” The temptation to put buyers in broad, all-encompassing categories is difficult to resist.  Marketers want their message heard by more people than fewer.  The irony is that less truly becomes more in many B2B marketing opportunities.

Better marketers (and their sales counterparts) understand the detailed, specific issues buyers face in their respective markets. They understand what motivates buyers and why one buyer’s needs are distinct from another.  This understanding makes it easier to engage prospects in meaningful conversation about how your products and services can help them. Demonstrating that you are part of a community focused on solving key business problems (not just trying to sell stuff) is also important to creating belief in buyers that it is worth the time to have a conversation with you. Personas are a primary tool to help you move from technology supplier to industry insider. Relentless study about who buyers are and what causes them to buy keeps these personas current and useful as tools.

This is the essence of the advice I hope to convey to this class of soon-to-be-MBAs.  I will see how successful I am at achieving this goal based on the comments I receive to this post.  Won’t you join me in reading their comments and seeing how I did?  Expand the comments link below and join the conversation.

Why Doesn’t Marketing Automation Impact the Business?

Photo courtesy of Full Circle CRM and iStock.

Earlier this month, Gartner published its Magic Quadrant for CRM Lead Management.  Naturally, Eloqua and Marketo commanded top spots in the upper right quadrant. But a cluster of really big companies look poised to close in on them from the lower left. So marketing automation – in particular lead management — looks pretty hot. Right?

I’m not so sure.  In this report, I was struck by the second sentence in Gartner’s opening summary, which said:

Impact on revenue generation is high and satisfaction with vendors is generally strong, but organizational alignment issues continue to reduce potential impact.”

Reduce potential impact.  Ouch.  Not good.

But which organizational alignment issues does Gartner mean?  Inside the vendors studied?  No, I think Gartner is referring to organizational issues between sales and marketing

Despite growth in market size, vendor offering sophistication, and customer interest, marketing automation has yet to reach that tipping point where marketing operations (who manages automation tools and directs campaign execution) stands on equal footing to brand, PR, product promotion, collateral development and sponsorships.  Even steadfast marketing automation practitioners still suffer from fundamental concerns about how well their systems pay off – especially when marketing metrics and sales numbers don’t line up. 

I hear many marketing execs ask the following questions, which – to my mind – are symptomatic of deeper problems in the automation world perpetuated by the chronic tension between marketing activity and sales results:

  • Which campaigns actually had the most impact on deals? Which drove the most sales activity and follow up that, in turn, drove more deals?
  • How can I demonstrate Marketing’s contribution and influence on revenue? And show the executive team that money spent in Marketing is more effective at moving the top line than hiring more salespeople?
  • How can we generate more pipeline/opportunity from each campaign?  Where should I invest to do this?
  • Why don’t my reports match what Sales has in its pipeline or forecasts? Why am I always defending Marketing metrics as a result?
  • What really happened to all those leads I generated last year? What percentage went into the pipeline?  Became deals? Are still active? Require more nurturing to re-engage? Why can’t we track sales activity on a per contact basis, instead of opportunity or lead?

These questions, and others like them, speak to the continuing inability to prove and improve Marketing’s contribution to the business.  To use this technology to really get to the facts and levers that move the business — and to stand on equal footing with Sales.

Because of my longstanding interest in demand management - and the people, process and technology issues that arise when marketers undertake automation efforts – I was intrigued when a friend told me about a new business she had started to help answer these questions. As a former CMO in large and small companies, she felt these pains acutely and believes marketing execs need something more to help them understand what’s happening with campaigns, make sure marketing data adds up, drive more revenue, and plan with confidence.

I was also very honored when she asked me to join her company’s advisory board to help her shape its future.  I worked with CEO Bonnie Crater at a company called Stratify (now part of Iron Mountain) in 2000 and 2001, and am pleased to become one of her firm’s advisors.

In future blog posts, I plan to share what I’m learning about marketing automation by working with Bonnie and her company. And shed some light on the best practices that answer the questions that will move automation and operations from the marketing back office into the forefront of the business.

What Can Marketers Learn from an Innovation Powerhouse?

Courtesy of ITSMA and PARC, A Xerox Company

Xerox PARC.

The name is synonymous with “innovation”.  Since it’s founding in 1970, this research center has pumped out a wealth of ground-breaking inventions: laser printing, Ethernet, the graphical user interface (GUI), object-oriented computing, and so much more. Spun-off in 2002, PARC (as it’s known today) is squarely in the business of developing new breakthroughs in technology for commercial and government partners including Xerox.

What can a research think-tank like PARC teach B2B marketers?  Quite a bit.

Last week I had the wonderful opportunity to attend the ITSMA Marketing Leadership Forum in Napa. While CEO Dave Munn and company put together another spectacular agenda (you can review the tweet stream at #ITSMAmlf12), that they asked Lawrence Lee, PARC senior director of strategy, to talk about how to become and stay innovative was an insightful move.

Sure, I happen to enjoy office space at PARC and to hold a warm spot in my heart for this Silicon Valley institution. But let’s walk past my little biases for a minute. Lawrence’s talk was particularly relevant to B2B marketers because good CMO’s spend a lot of time collecting and sharing customer insight. By studying customer behavior and pain points, good marketers uncover non-obvious opportunities to solve problems and create new business – like researchers at PARC do.

To achieve this, Lawrence explains, it’s important to create a learning mindset in marketing where taking calculated risks is part of the culture. PARC manages research projects like a good VC or stock broker manages a portfolio of investments.  Top marketers today must also manage a portfolio of activity aimed at increasing consideration and deal opportunities.  Fundamentally, both activities are pretty similar.

Courtesy of Lawrence Lee, PARC, June 2012

In the digital age, the marketing portfolio has become quite broad. Many marketers struggle to find the right combination of program tactics that move the needle on demand creation and sales enablement.  It’s never one particular approach – like creating a Facebook page, buying the right email list, or running a world-class event or Web seminar – that brings in the prospects.  Instead, marketers make the biggest impact when they take a consistent, investment-oriented approach to engaging customer and use different elements of the marketing mix to target buyers at different stages of the purchase cycle.

Using the figure shown here, Lawrence shows how PARC categorizes projects in four distinct risk/reward profiles. This helps PARC balance its need to make new breakthroughs against the requirement to drive new business.  Marketers should take a similar approach to deciding which marketing programs to pursue and which to abandon.  The matrix of risk/reward criteria for marketing may look slightly different, but each quadrant should include activity dedicated to:

  • Core – engaging with current customers to keep them well-informed, engaged with your company, and advocating for you.
  • Next-Gen – looking for new opportunities to cross-sell or upsell current customers and continue to add value to your relationship.
  • Scouting – building awareness, consideration, and trial with net-new customers for your existing products and services.
  • Options – investigating new opportunities in break-out, brand new markets that complement where you are now.

Determining what percentage of the marketing mix to dedicate to each area is an important consideration.  I recommend you put a healthy dose in Scouting, with Core and Next-Gen following. Never completely overlook Options, however, because new opportunity is often where true growth gets started.

It was fascinating to see SAP CMO Jonathan Becher’s presentation the following morning where he showed how SAP puts the innovation portfolio concept into practice.  Based on technology from an acquired company, Jonathan demonstrated SAP’s marketing dashboard that provides an online way to view, manage, and communicate activity health across marketing programs by region. This dashboard also helps to show the impact the tracked campaigns have on the pipeline.  Whether he intended to or not, Jonathan mixed together the PARC theory with SAP practice to really make the agenda hit home.

There were many other presentations — on balancing the demand generation equation, using simulation games to get to know your buyers better, creating stories, short messages and online demonstrations to embrace the customer perspective, and navigating the uncharted waters of marketing transformation — that were equally interesting and informative. Thanks to all the great speakers and attendees at the ITSMA Marketing Leadership Forum. Your participation made it one of the premier events for me this year.

Why Must Future MBAs Know More About B2B Buyers?

Segmentation, targeting, and positioning.

These are foundational concepts of any good MBA course focused on market strategy.  If you don’t start with “who” you want to reach — and understand whether or not the audience represents a lucrative market for your products or services — then B2B marketers stand to waste a lot of time, effort, and money. 

Ask Phil Kotler, if you don’t believe me!

Yes, this is all true.  But today it’s not enough.

B2B marketers set themselves up for disappointing results if they stop short at positioning and fail to look at what motivates purchase behavior and how buyers buy. This is a tough one for many B2B marketers — those with a tech bent in particular — because we tend to think we sell to companies, not people. And we tend to talk a lot about our companies, products, and features, not about the problems and issues buyers care about.

Profiling, personas, and “behavior”-graphics are tools B2B marketers should use more to shape marketing strategy. Knowing how the business purchase process work — all of its intricate, convoluted glory —  is as important to choosing where to play in the market as are understanding what you do uniquely, the market potential for your offerings, and how you should communicate and deliver your capability to the market.

I explored the how and why of B2B buyer behavior with Professor Ravi Shanmugam’s Marketing 551: Marketing Analysis and Decision Making class at Santa Clara University’s Leavey School of Business this evening. I was the “special guest lecturer” — which means I got to talk with a bunch of bright, aspiring marketing students about business buyer behavior and why great marketers need to know their audiences intimately to succeed.  Some of the more interesting points of the discussion centered on:

1) Whether or not B2B personas are any different than B2C — and how the process of building personas is very similar, but the components and features that make up the B2B persona are different.

2) Which characteristics distinguish the B2B buyer from the B2C — and whether B2B buying motivations and behavior more or less complex than B2C.

3) Why knowing the difference between decision makers, influencers and gatekeepers (like purchasing agents) is important in understanding buyer behavior.

Still surprising to me, the students seemed more interested in Xerox and what I did as the head of industry marketing there than in hearing about theory or research insight. Examples shared on thought-leadership, promotion of educational/industry content (in the form of webinars), and integration of social media into the marketing mix were popular.

As always, I asked Prof. Shanmugam’s class to comment on my presentation and discussion through this blog post.  (Professor Shanmugam offers class participation credit if they comply with this request!) Please read their comments to learn what this future group of MBAs think about as they reflect on our session together.

Driving Growth in B2B Companies? Try This Playbook

December is a popular month to spend planning for the next year or reviewing current progress.  I find it is also a good month to reconnect with your corporate strategy and ask “what can marketing do to help create more predictable, profitable, and sustainable growth for my company?” Recently, I read The B2B Executive Playbook, written by my friend Sean Geehan of the Geehan Group. I think it offers a succinct summary of the factors that most affect the B2B business’s ability to thrive, with a unique perspective on one — why it’s important to focus on your current clients as a way to grow revenue. 

I first met Sean in 2009 at the Customer Reference Forum. We stayed in touch through my transition to Xerox and he invited me to speak at his Executive Summit on Business Transformation in February. He asked me to review an early draft of his book and sent me a final copy. (This is all the open disclosure stuff, folks.) I have heard him speak several times on the topic of this book.

The B2B Executive Playbook consolidates principles that apply specifically to companies that sell highly-considered products or services through a direct salesforce to other businesses. Some of the ideas here resemble others we have seen, but are good reminders. The “B2B relationship continuum” in chapter 2, for example, reminds me of research that my former director, Laurie Orlov, wrote on The Three Archetypes of IT. The “Market-Aligned Three-Circle Venn” in chapter 5 calls to mind Jim Collin’s hedgehog concept” popularized in Good to Great.

What Sean does really well, however, is put these concepts in the context of a vitally important B2B best practice — that of engaging with your customers to collaborate on your company’s strategy directions, refer you to other decision makers, advocate for you as a trusted supplier, and do more business with you.  A lot more. 

Case in point: HCL, a professional services firm located in Noida, India.  Paraphrasing the book, HCL lacked a systematic way to interact with key decision makers from their customers prior to 2008. HCL’s Americas President Shami Khorana decided to target their “top 80″ clients  in a formal program to exchange ideas and gain their collective feedback. And to demonstrate a sincere interest in keeping their business. Khorana credits this program, in part, with HCL’s rise from $1.4B in 2007 to over $3B in 2010, with an annual growth rate of more than 20% — even through the economic downturn of 2008/09.

Through other case studies like HCL, the B2B Executive Playbook gives practical advice on how to build and retain key decision maker relationships at the right level of your organization, and how to maintain a select group of the key executive customers in your market who will advise you willingly and buy from you consistently.

Recognizing that B2B companies win or lose based on the strength of relationships with a relatively few, very key customers is the essential insight that B2B executives and marketers can overlook. Consider your 2012 marketing plans, for example, and ask how much you intend to spend on customer acquisition versus retention, loyalty, and advocacy. Reflect on how much time your sales representatives spend with real decision makers versus influencers or users (who can’t sign a purchase order.) 

If you are like most B2B, large enterprises, then you will find a quick read through this book will help to reorient your thinking around those customers who matter most and hold the keys to your future success.

Take a look: I’m sure you’ll enjoy it.

What Did B2B Marketers Learn in 2011? – A discussion on

Craig Rosenberg, VP and leader for the Focus Expert Network (aka @funnelholic), invited me to participate in an online discussion about what B2B marketers learned in 2011. Now that I am into my “sophomore year” at Xerox, I can’t presume to speak for all B2B marketers like I did when I was an analyst. However, I thought I would share a few personal insights about what I’ve learned working from the marketing trenches at a very large, very tenured, highly-recognized brand in the tech space.  Here are my top 5 “hard won” lessons from this year:

1) B2B marketers must give Sales any excuse to talk to clients. There are a million things to do as a B2B marketer. If you prioritize those things that create an opportunity for your account managers to check in with a client — or your sales reps to reach out to a prospect — you will do more to align marketing activity with sales outcomes and increase marketing’s value to the business. As you put together marketing programs and campaigns, always ask “where does Sales engage the customer in this process?”

2) Time spent on segmentation and targeting is invaluable. B2B marketers are learning to understand buyers better, but the lesson isn’t complete. Knowing your buyer intimately — having the ability to define a buying persona precisely– lets B2B marketers develop the content that engages buyers and put it where buyers will find it. You also have to understand who Sales considers a target, because if you develop leads that aren’t in anyone’s territory or too small to sustain your average deal size, no one will pick them up and work on them.

3) The pressure to move from lead generation to demand management will continue to increase. Sales can’t pursue every “lead” that marketing uncovers because sales need to focus on those prospects that offer the best immediate opportunity.  B2B marketers who think beyond the current event, campaign, or quarter-end will better create programs that develop demand, qualify it over time, and deliver those “ripe” opportunities to sales — within the territory and opportunity criteria that sales wants to pursue. This is the best way to scale the pipeline and put the revenue generation engine of your firm into high gear.

4) The value of marketing content must be measured in the buyer’s eye, not yours. This is a tough one for B2B marketers to learn because they believe their products and services are so special — and require such obscure, tedious description — that they find it hard to talk about much else with authority.  This past year, top marketers learned that hiring people who know how to write, who can tell a compelling story, and who can make content interesting to watch is the best way to leave the meaningless blather and inside-out perspective behind.

5) Learn how to extend the life of your content assets and events. B2B marketers focus a lot of activity around events like tradeshows, sporting events, dinner meetings, or webinars. While these events help tell your story or make executive-to-executive connections, the activity also presents many opportunities to capture an asset and use it to engage those who could not be there live. Whether it is slides, photos, video recordings, interviews, tweets, or blog posts, every event creates artifacts that smart marketers can use to help sales keep client conversations going — or to engage new prospects — while demonstrating your unique point of view, expertise, and commitment to building deeper customer relationships.

What have been your key lessons from 2011? Check out the discussion on this topic and join in!

Most CEOs Think Marketers Lack Credibility – Focus on Revenue to Change That

Do CMOs really understand the fundamental nature of their businesses?  Not as well as they should.

London-based Fournaise Marketing Group released a study recently where they interviewed more than 600 large corporation and SMB CEOs and decision-makers in the US, Europe, Asia and Australia. In this report, 73% of these CEOs said they felt that their marketing executives lack business credibility and that marketing is not the business growth generators it should be.  These CEOs think marketing fails to demonstrate how marketing strategies and campaigns grow revenue by generating more customer demand, more sales, more prospects, or more conversions.

Other — equally dismal — findings include how marketers:

1. Talk too much about brand, not enough about revenue.  77% of CEOs feel marketers talk about brand, brand values, brand equity but fail to link this back to results that top management cares about: revenue, sales, earnings, or market valuation.

2. Chase social media, but can’t demonstrate its impact. 74% think marketing focuses too much on the latest marketing trends such as social media, but can rarely demonstrate how this activity helps them generate more business for the company.

3. Fail to demonstrate marketing ROI. 72% see marketing ask for more money, but can’t explain how much incremental business this money will generate. What’s worse, when asked to increase their marketing ROI, 73% of CEOs see marketing respond with cost cutting ideas stemming from better economies of scale or tougher negotiations with their third-party partners, instead of top-line growth generation like more prospects and sales opportunities.

4. Focus on the wrong things.  67% of CEOs believe marketers don’t think enough like businesspeople: 67% see marketers focus too much on the creative, “fluffy” side of marketing and not enough on business science. These CEOs think marketing relies too heavily on agencies to come up with the next big idea.

Wow, that’s harsh. But not unwarranted.

Two marketers I respect deeply – Carlos Hidalgo, CEO at Annuitas Group, and Lisa Arthur, CMO at Aprimo (now part of Teradata) — highlighted this research in recent blog posts. Unfortunately, it’s the type of information that most marketers “know” intuitively. But it really smarts to see overwhelmingly high numbers demonstrate the depth of the problem.

So how do we marketers get out of this mess? I’ll paraphrase some of Carlos and Lisa’s good advice with 5 practices that you, as a top B2B marketer, should adopt to shift your focus from marketing metrics to business outcomes:

1. Plan and execute marketing programs based on business results. Go beyond metrics that simply show opens, clicks, and response rates by measuring opportunities generated, “influence on sales pipeline”, conversion rates and other metrics that relate to business outcomes. Focus on this outcome-oriented data to learn which marketing activities — and in which combination — produce the best results. Replicate those.

2. Develop lead management processes. Poor process leads to a lack of visibility and open-loop activity that leaves revenue on the table. Instead, put tooling and process in place to help both sales and marketing generate new business opportunities, manage volumes of business inquiries, and improve potential buyers’ propensity to purchase. This will let you increase alignment between marketing activity and sales results and lead to an improved impact on revenue.

3. Use business language to describe marketing results. As the Fournaise survey clearly demonstrates, C-level executives are not interested in the “art” behind marketing. Chief executives want marketing to send qualified leads to sales that generate revenue. Push your team to think about the business as a whole and to communicate marketing’s impact on the business as they see it, not as you see it.

4. Determine what your customers want, not what you are trying to sell them. Most marketing and selling bypasses the customer. Yet, not understanding your buyer makes it difficult to engage them and convince them to buy your product or service. Get to know your buyer by listening to them and learning why and how they buy. This is not easy and never ending; successful marketers make it an ongoing part of the planning, execution, and measurement process by asking “how will this change the nature of our relationship with customers and how will we know we achieved that?”

5. Use analytics to help distinguish signal from noise. While studying customer buying behavior is the micro side of the problem, understanding market and buyer trends is the macro side. Invest in tools and process to help gather and analyze data. And to better understand customer segments and purchase patterns. Then apply these insights to campaigns and show how marketing impacts revenue, earnings, and market share.

In Xerox Global Document Outsourcing Services, we have a marketing team dedicated to analytics, business intelligence, and predictive modeling for the services business. Their goal is to put “analytics into action” by starting with a top-down view of the market and analyzing where the best business opportunities exist for Xerox field sales to pursue — either within existing accounts (by cross selling or upselling new business) or by attracting new logos. Of the many things we do in marketing, this is one of the most vital and important areas and one where the alignment between sales management and marketing strategy is the highest.

What is your experience? Are there other things marketers must do to better align with business and become the revenue generation engine for your firm?


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