A true story......
A few years ago I was part of a team growing a UK software business at over 40% per annum, most importantly for this story, through sales primarily in the U.S. I learned a lot about the difference in approach to B2B marketing in the U.S. compared to Europe. It was evident that the U.S. was developing a much more efficient model, allowing businesses to grow faster. Since then I have often considered how Europe can catch up with the U.S. and reform its B2B marketing and sales alignment to accelerate the growth.
Necessity is the mother of invention
It wasn’t pure innovation that led to the efficiency improvement U.S. companies evolved, that saw them leaping past their European counterparts. it was in fact the scale of the territory to be covered and the commensurate costs involved that became a more urgent driver. However the enabling technology innovation that delivered the tools that made it possible, nemely marketing automation platforms, are primarily from the U.S.
Let’s look at the key drivers of the business problem that led to a change in the US model for B2B companies.
- Sales resources are expensive (in comparison to marketing resources for example)
- The internet has changed how people buy – buyers are increasingly in control of the information gathering process on their buying journey and they hold off talking to sales until they are ready to actually “buy”
- Marketing is stacked full of repetitive tasks that could increasingly be automated.
OK so why are these loosely aligned statements important?
Companies selling across the US are faced with a logistical problem that many European companies don’t comprehend. In the UK for example, we think nothing of posting off a sales rep to Birmingham from London, simply to have a meeting to qualify a prospect. In the U.S., this same qualification meeting could involve flights, hotels and a two day round trip from NYC to San Francisco or Dallas.
For US companies, the focus on reducing the customer acquisition cost meant there had to be a better way. Because of smaller territories in Europe, the cost driver has not been as compelling.
The need in Europe is to re-align Marketing and Sales
For B2B companies in the US, the adjustments to the marketing and sales model became obvious very quickly through powerful economic drivers:
- If sales resources are inherently expensive, the solution was to concentrate their role on the bit of the buying process that only they can do i.e. negotiating, maximising and closing the sale and measure them around the key metrics of; % sales won/lost, time to contract/close and total contract value. This creates an efficient revenue generation machine that is allowed to focus exclusively on the “qualified sales funnel”. Largely this process is a concentration of skills and practices sales already know, so there is not much need for re-equipping or re-training, just management adjustments and targets/quotas.
For this new model to be successful, sales will require a constant flow of highly qualified leads, that are “sales ready”. This is where marketing has to stand up and be counted and take on more responsibilities, engage with technology, a develop a new way of working to complete the team, (notice I say team singular here, that’s what it has to be one team; marketing and sales).
In summary marketing needs to:
- Adapt the lead generation process to the buyer’s journey through inbound marketing. Attract prospects with compelling and engaging content, convert into leads by offering valuable insights and buyer support and then nurture and qualify your leads to become sales ready, to pass to sales teams
- Take responsibility for revenue and the development of an identifiable quantified (in predictable revenue) marketing funnel. This funnel is deep and includes leads, engaged at different stages of the buying cycle.
- Measure everything so that the customer acquisition can be carefully managed and marketing spend is valued as an investment that delivers revenue into the business with acceptable ROI.
- This can only be achieved using marketing automation software (such as Hubspot). This marketing automation SaaS platform allows the marketing resources to automate regular tasks such as e-mail nurturing programs and tracks engagement with leads so they can be scored, qualified and passed to sales.
Show me the money
So for European companies, although the catalyst for change is not so evident through cost analysis, the benefits are still very attractive.
Inbound generated leads cost on average 62% less than outbound leads.
Companies that re-align marketing and sales and use inbound marketing to deliver their revenue can see significant improvements in predictability of revenue and profitability.
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