8 Essential KPI's for the Intersection of Marketing and Sales

Conversations between sales and marketing improve when marketing generates data on the state of joint processes such as lead management.  But companies who are serious about orchestrating sales and marketing in a modern go-to-marketing model need more than these execution-level metrics. At the intersection of sales and marketing, senior executives need operational-level investment, resource allocation, and performance metrics.

Tech marketers have done a great job of growing the range of measurement dashboards within their management tool box.  These reports provide data about process execution and are primarily driven from automation such as CRM, email marketing, and web analytics. The data in these reports can answer important questions such as how many leads were produced and what really happened to them? This data can be extremely useful when talking to sales.  Replacing hearsay, gut feelings, and assumptions with accurate data results in a much more credible and actionable conversation.

Operational Insight Drives Strategy
 

While this kind of data is valuable at an execution level, it isn't the kind that drives strategic decisions. Senior management needs to know how to invest their most powerful resources – money and people – to get the best results. For this task, they need operational key performance indicators (KPIs) that answer questions such as what are my people really doing and where is my money deployed. Just as important, they need context around this data in order to understand its meaning and highlight what to change.

Comparison benchmarks serve as excellent insight into the meaning of operational-level KPIs. IDC has produced such operational-level scorecards for many years for each function separately - for marketing (IDC's Marketing Performance Scorecard) and for sales (IDC's Sales Productivity Scorecard). These scorecards are based on detailed investment data from over 100 tech companies. IDC parses leaders from laggards, mines for best practice nuggets, and combines this information with insights drawn from scores of interviews, interactions, surveys and the IDC teams' deep practitioner experience.

Introducing the Customer Creation Scorecard: Operational KPI's for the Intersection of Sales and Marketing
 

However, operational benchmarks have been lacking for companies who are serious about orchestrating the collaboration between sales and marketing within a more modern go-to-market model.  For this initiative, senior executives need to look at the joint investments in sales and marketing.

Recently, IDC introduced the Customer Creation Scorecard - eight operational KPI's leading companies should add to their dashboard. The eight are organized into three categories: investment, staff efficiency, and productivity levers.

Here are the aggregate level benchmarks for your 2012-2013 planning processes:

1. Investment: Sales + marketing budget ratio = 10.6% of revenue is spent on sales and marketing combined
2. Investment: Sales to marketing ratio = 4:1
3. Investment: Marketing investment per total sales headcount = $40K to $70K
4. Staff efficiency: Quota bearing headcount to field marketing ratio = 32:1
5. Staff efficiency: Program to people KPI = 27% of all sales and marketing investment is spent on programs and the remainder on people
6. Productivity levers: Operations staff percentage = 4.7% of all sales and marketing staff are in sales operations or marketing operations roles
7. Productivity levers:  Sales enablement score = 47 out of 100 is the index that IDC has developed for the technology industry based upon detailed quantitative and qualitative research
8. Productivity levers:  Lead management score = 52 out of 100 is the index that IDC has developed for the technology industry based upon detailed quantitative and qualitative research

IDC finds that these benchmarks vary significantly depending on attributes such as go-to-market model, company size, and industry sector.   IDC's also provides guidance around these KPI's.  For example, IDC recommends that companies measure sales and marketing costs jointly to better control overall expenses (this includes "shadow" marketing investments where sales teams use their own funds to conduct marketing activities).

For more information on the Customer Creation Scorecard, IDC insight on what your KPI ranges should be and what to do about it contact me or anyone on IDC's Executive Advisory Group team.
 

Read More

B2B Marketing Going Mobile

IDC calls Mobility one of the Four Forces transforming the information technology industry. How big a force is mobility in tech marketing? Marketers at the forefront say that incorporating mobile channels into the mix is not an "if", but a "when".

Rampant Mobility Adoption
IDC projects that smart phone shipments will be $659.8M in 2012 up 33.5% from 2011 and expects shipments of media tablets to be $87.7 million, an increase of 38.6%. At the recent B2B's Digital Edge Live conference, Mark Wilson, SVP of Corporate and Field Marketing at Sybase, an SAP company, got lots of tweets when he claimed that there are more mobile phones in the world than toothbrushes (5.5B vs. 2B)! Businesses are rapidly putting smart phones and tablets into employees' hands in order to increase productivity and responsiveness.

Why Mobility Matters to Marketing: Better Buying Experiences Win
Mobile devices also enable better customer engagement and loyalty - this is the reason why mobility should matter to B2B marketers. Many companies continue to imagine that people make buying choices based solely on the value of the product or service offered. However, the buying experience itself is playing a bigger role in choice.

The internet has changed the buyer's selection behavior. Google has accustomed us to simply stating our needs and then enjoying the luxury of thousands of options. With such an abundance of choice, buyers can flit from option to option, deserting those that disappoint and engaging where they find an easy, clear, interesting, and possibly entertaining, match to their need.
To increase the chances of making a match and thus gaining engagement, B2B marketers already employ various types of buyer context including personalization, role, and vertical industry to the digital dialog. Mobility provides marketers with added potential.

• Convenience - Mobile buyers can engage anywhere and anytime. Time flexibility increases the buyer's control over the interaction and can make it more satisfying. Users can use otherwise wasted time, so they may engage more deeply. Some companies report average interaction time going from seconds to minutes.


• Relevancy - Vendors can better match a buyer's need by incorporating location-based context. Location-based context takes many forms. Offers can be linked to a nearby kiosk at an event, for example. Customer service representatives or sales people who are physically with a buyer can integrate mobilized digital content with the interpersonal dialog at the moment of need. Additional interaction time also increases the buyer's data footprint so that more preferences can be implied.

Going Mobile
Another panelist at the B2B Digital Edge Live conference, Jeff Klainberg, Director of Mobile Strategy, at American Express OPEN, recommended these three steps to mobilize your marketing:

1. Establish mobile channels at parity with other digital channels. (Bring things you now do on the web to your mobile channel)


2. Leverage open assets (such as free apps and free content) to create differentiated engagement and value delivery


3. Breakthrough: once you get some experience, start creating differentiating new experiences that you can only do on mobile devices

Ideas for Successful Mobile Marketing
Sybase's Wilson provided his company's experience in successful mobile marketing applications:

• eBooks: Books published for tablets and published on iTunes has led to 20x demand over print for Sybase content


• Display ads: "Tap-rates" from mobile display ads get a substantially higher response over PC web click-rates


• Mobisite: Some microsites optimized for mobility have achieved more than an average of five minutes per session


• Events: Mobility enriches the event experience with the ability to buy goods on the event floor, to participate in contests, and recieve alerts


• Demos: Sales enablement is one of the BEST uses of mobility. The ability to augment a sales conversation with immediate use of experts (via video), demo's, or other digital enhancement can transform the sales job
  

Today, mobility is smart phones and tablets. Expand your vision of what a "device" can be. Check out the world's most watched corporate video (created by agency Doremus) for Corning called A Day Made of Glass.

Read More

The Personalization Paradox: To get more personal, B2B marketers need to think in terms of accounts

Personalization is fast becoming a de facto customer expectation. In the old days of B2B marketing (i.e. today) people go to your web home page, scan for links, click around and hopefully find their way to the most relevant information. That model is quickly being replaced by the social-mobile model in which information finds you based on your interests. Not only should it be delivered to you, but wherever you go on the Internet content should be designed around you. In effect, digital engagement is transitioning to a Google Adwords model where everything is specifically targeted and customized for every single visitor.

This is a very challenging transition for B2B marketers. It means you have to identify as much as you can about a web visitor and serve content to them dynamically in the amount of time it takes for your web page to load in their browser. The implications for web infrastructure, content development and management, and data structures are significant.

A key to making visitor data more useful to the marketing and sales process is the ability to instantly identify visitors and associate them with specific accounts. Many B2B companies construct their go to market models around industries, segments, and increasingly, named accounts. This is also how they set up their CRM systems and revenue reporting. However, most marketing automation systems work at the contact level and use emails as unique record locators, neither of which are ideal for an account based model. Marketing needs to embed the account perspective into everything they do. Fortunately it is as relevant to the personalization process as it is to the alignment issue.

Key account level questions for personalization:

• Is this an existing customer?
• Is this person's company in the same corporate family as an existing customer?
• Is this a targeted segment, vertical, or named account?
• Who are their direct competitors?
• What role are they likely to play in the education, evaluation, and purchase processes?

Understanding someone's professional profile opens the door to the real power in B2B marketing - being able to connect the relationships of contacts within accounts and the relationships between accounts (who owns who). The result is more targeted engagement, faster lead identification and qualification, higher conversion rates, and a customer experience that is really designed around the customer.

IDC recommends:

Focus on specific targets to facilitate the process of content development and provisioning. Prioritize by segment, vertical, or named accounts and work through the content development punch list.

• Deploy an IP identification capability that can be easily integrated with your customer databases, web, marketing and CRM systems.
• Adopt an account level attribution model so contacts can be readily assigned to accounts in the CRM, and marketing influence can be tracked through the sales pipeline.
• Push the engagement envelop as far as possible because the more immediate it is the more influential, e.g. integrate chat with key targets and offer them chat sessions with subject matter experts not just sales people.
• Connect contacts within accounts carefully. Regional proximity, departmental similarities, and what search terms/links they used to reach your site should be factored in to increase the likelihood of finding familiar people or priorities.

IDC believes that personalization is a critical function for all digital marketing infrastructures. Reaching your audience sooner and grooming them through a completely personalized experience will be key to gaining market share. This is no small task and those that get started early will find market advantages that late comers will be hard pressed to displace.

Read More

B2B ROI: Marketing is Not a Candy Machine

"What is your expected return on investment for the next campaign?" This question is common and easy to ask, but it is also one of the most challenging to answer. Determining financial return on investment (ROI) within the context of a long sales cycle has largely been a failure. Becoming financially accountable is possible – but B2B marketing departments will need more advanced quantitative tools.

How should companies measure the financial value of marketing expenditure? For some ordinary company expenses, such as capital equipment, ROI is a common measure of value. Never before have there been more spreadsheets and dashboards available to slice and dice any facet of marketing. With information so available, it has never been more justifiable to treat marketing like an ordinary expense and ask for an ROI similar to the type that applies to the purchase of new equipment.

B2B Marketing is Not a Candy Machine

Yet attempts to measure meaningful financial ROI in a B2B marketing context using methods applied to capital expenditures have largely failed. They have failed because the assumptions underlying ROI calculations do not apply to the majority of B2B marketing situations.ROI calculations assume that a marketing program is a simple, unambiguous transaction. Such a transaction works like this: If I put quarters into a candy machine and push a button, a candy bar pops out. The investment (quarters) and the return (candy) are clearly and immediately connected.

Simple math can measure simple marketing. If I send mail piece X, I get 100 orders. If I send mail piece Y, I get 200 orders. Therefore, I should invest in Y. Because I know the cost of the mail programs (investment) and the resulting value (return), I can calculate ROI.If the only marketing activity conducted was the mail piece, then an ROI calculation would be simple arithmetic.

However, B2B marketing within the context of a long and complex sale is not simple. It is a multifaceted set of influences that is applied against quickly changing human buying behaviors. IDC research shows that it takes an average of 19 months to create a new B2B customer and includes multiple touches.

Compare our single direct-mail example with an actual marketing process that involves as many as 25 different media types over nearly two years. What role did ads play in getting the buyer to respond to either mail campaign? What about the sales call campaign that coincidentally occurred about the same time?

GUIDANCE: Don't attempt to calculate simple B2B ROI. Simple ROI fails to measure B2B marketing value because B2B marketing value results from the accumulation of effects over time. Other types of success measures will be useful at measuring tactical programs, but financial ROI using data collected at this level cannot be accurate.

First Step: Get a handle on your "I" (Investment)

The fact that simple ROI fails to measure marketing value does not mean that businesses are forever doomed to wonder despondently about the value of their marketing investment. However, progress requires more data and more advanced quantitative tools.

One hurdle is the lack of basic financial data within marketing departments. IDC consistently sees that many tech marketing departments have a poor understanding of their "investment," or "I," much less an ability to then determine the "return," or "R."

GUIDANCE: Do start by measuring your "I" (investments). Track marketing investments carefully over time and seek to control these expenses. Each year, IDC produces a Marketing Performance Matrix based on our annual Tech Marketing Benchmark survey identifying best practitioners in marketing operational excellence. In collaboration with these best-in-class companies, we've identified the operational behavior and performance indicators most useful for investment control and other important practices. Tech marketers can participate (for free) in IDC's this survey and receive a complimentary copy of the aggregate results to see how their company compares. Contact Joe Ferrantino (jferrantino@idc.com) if you are interested in participating.

Next Step: Analytics are required to start down the "R" path

The candy machine example described previously is a model for an ultrasimple, "coin operated" buying process. A more complex process, such as B2B buying, has many more steps and requires a more sophisticated model. Although B2B buying is not neat and linear a well-thought-out, multi-stage, pipeline is a reasonable proxy.

By capturing lots of behavioral data at touch points along the way, marketers can describe buyers' progress from step to step toward a purchase. Important metrics include conversion (how many buyers from early stages progress to the later stages?), velocity (how fast do buyers progress through the stages?), and volume (will the amount that buyers intend to buy satisfy the need for revenue?).

Clusters of data-producing programs then become the levers and knobs that a company uses to nudge buyers from stage to stage. B2B companies with data learn quickly about the interdependency of marketing and sales in nudging buyers through the pipeline. IDC research shows that the average large tech company invests $40K - $70K USD in marketing for each sales person. This ratio may change in the future as more companies exploit the leverage between the two functions.

Once an organization has collected enough data to model a reasonably accurate customer creation pipeline, business intelligence and analytics tools can be applied to tease out the contribution of various marketing program components to movement between pipeline stages. Combinations of different programs can be tested for their ability to increase conversion and speed velocity, thus creating a pipeline that delivers the required revenue at a continually lower cost.

GUIDANCE: Do invest in a data-driven, buyer-centric, customer creation process that links programs to a smarter pipeline, which in turn links to revenue. Simple ROI calculations do not work for complex processes. To start down the path towards a reasonable answer to the financial ROI question, invest in a more sophisticated customer creation process model, lots of data, and analytics..

Read More

Channel Marketing from a Sales and Marketing Perspective

Complexity and Diversity at Scale

Channel marketing in large high tech companies is one of the most complex and diverse operational activities in all of marketing. Complexity and diversity are pervasive across: market, product, program, even organizational structure. Channel Management groups typically report to either marketing or sales. The trend today favors the sales reporting approach, especially for regions outside of the US. The in-country channel manager will either be or report to the regional head of Sales. Channel Marketing typically sits within channel management or corporate marketing. In many companies the main function of the channel marketing team is to act as a conduit between business units/product management and worldwide channels. This creates an inherently complex organizational structure from which a wide range of additional sources of complexity and diversity must be managed.

The Sales Perspective

From a sales perspective, channel management is all about recruiting and performance – identifying key opportunities and the partners best suited to capitalize on them, and investing in their success. This typically involves working with key partners to develop business plans, including staffing, investment planning, and performance goals. However, it is rare that these business development plans include specific marketing plans developed in conjunction with the vendor's channel marketing team.

This is a critical point of failure for many channel programs. Most partners do not have the marketing expertise needed to manage full scale, long term strategic branding and lead generation campaigns. Many do not even have marketing staff. As a result, much of the marketing effort focuses on discrete expenditures such as events – it is not managed as a coordinated set of campaigns optimized for a multi-channel, multi-touch, long sales cycle lead generation process.

The Marketing Perspective

From a marketing perspective, channel management is all about programs. Programs for recruitment, training, and of course, performance. Given the immense diversity in the channel it is impossible to offer a one-size-fits-all approach to channel marketing programs. But it is equally impossible to individually serve the needs of every partner.

The Partner Perspective

From a partner perspective, channel management is about of all things, consistency. It takes on average about a year for new partner programs to be fully adopted and implemented so changes must be highly rationalized and carefully rolled out by vendors.

Standardization and Specialization

Thus the need to find a balance between standardization and specialization. To find the right balance, specialization decisions have to be made first and the first specialization decisions that have to be made are about standards. The question is: what can we offer to every partner in each category and what opportunities/requirements are there for custom programs? This should be asked across a defined set of categories:

y Partner class: (Platinum, Gold, Silver, etc.): this one is obvious and universally addressed.

y Partner type: (Dev, VAR, ISV, SI, etc.) This one is also obvious but there is a lot of room for creativity. For example, do VARs get a special "turnkey" product offering that is not available to others?

y Region: This is an especially challenging area for channel marketers as there are real market differences in terms of culture, technology adoption/maturation, regulation, as well as language that make regional marketing more decentralized.

y Technical/Product focus: The need for specialization here is largely determined by the breadth of your offering portfolio. But companies with hundreds of solutions need to be especially careful not to overwhelm the partner community.

y Strategic alignment: Making changes to your market direction or product mix requires a huge commitment from the channel and they will require not only special programs but also special monitoring and guidance to ensure effective changes are made. Data is particularly important and additional incentives for feedback may be necessary.

y Partner potential: This is a two-fold problem - identifying the high potential partners and understanding the specific drivers of their business with your brand. Getting these research issues right is critical to moving the most valuable growth opportunities up the performance curve.

Standard marketing programs, campaign models, events, collateral and other go to market assets can be designed for each of these categories. Then specialized programs can be overlaid to facilitate coverage of partner capabilities relative to market opportunities.

It is important to understand that marketing programs for high tech sales must be highly leveraged over a wide range of media and market segments. They must be managed with a long term perspective. Most MDF, JDF, co-marketing approval processes focus on short term, discrete activities such as an event and are measured on 30 day or 60 day timelines. However, this is not an effective way to market complex solutions that require great education and deliberation on the part of the buyer.

IDC Recommends

To address this, IDC recommends that companies better coordinate their sales and marketing teams with respect to channels. Channel marketing should develop marketing plans as a normal part of the business planning and market development process. In addition, the partner community should be researched and assessed with the same depth and regularity applied to the markets they serve so any changes in business drivers can be quickly identified and incorporated into channel programs in the most appropriate way.

Read More

Three Ways to Update Your Funnel for the New B2B Buyer

B2B Buyer behavior is undergoing an extraordinary sea change triggered by Internet technology. Tech marketing and sales teams haven't caught up. They still rely on a 112-year-old sales funnel model. IDC introduces a new Customer Creation Framework better suited for the way customers really buy.

The Internet tsunami has radically changed B2B Buyer behavior. Before the Internet, the B2B buyer making a complex decision had few sources of information. Vendors leveraged that knowledge gap. The vendor sales person was the primary gateway to information the buyer needed to decide – a tremendously powerful position. Fast forward to today. The Internet and social media have triggered a turbulent change – the rich dialog has shifted on-line and away from the sales person.

As a result, the B2B Buyer in a complex sale is now an expert buyer with very different behavior and expectations.

• Buyers are constantly on-line. IDC research shows that IT buyers find online search and the vendor website more valuable sources of buying information than face-to-face conversations.



• Many times, buyers know more than sales people. 55% of buyers think sales people are only somewhat prepared or not prepared for initial meetings.



• B2B buyers, who are life-long consumers, bring that expertise to work, expecting concierge service.

The Internet tsunami has massively changed Buyer behavior. Yet, we’ve seen surprising little change in the traditional funnel.

The Empowered Buyer is Killing the Traditional Sales Funnel

The traditional sales funnel is 112 years-old and bears the unmistakable marks of the industrial-era. Buyers are treated like widgets that sellers manufacture into a product called a customer. But today's empowered Buyer is far from a widget. The industrial-era funnel is horribly out-of-touch with reality. Symptoms of a sick funnel are showing up in poor conversion rates, lengthening sales cycles, and marketing and sales management challenges.


A New Customer Creation Framework

To ensure that prospective buyers want to become customers, tech companies need a new framework that better aligns with the way buyers buy today. This framework should maintain what is valuable about the industrial-era funnel. For example, the graduated stages of the traditional funnel are a useful, practical tool for measuring progress.

In order to meet the needs of the 21st century tech buyer, this new framework, which IDC calls the Customer Creation Framework (Figure 2), must advance from tradition in three important ways:


Buyer-centric: Act like a Concierge
Replace the manufacturing mind-set with a service orientation. Act like a concierge who delights guests with information and support services that guide them through their "Buyer's Journey". The "Buyer's Journey" describes the cognitive process that a buyer goes through as he makes a decision. The industrial-era funnel was almost exclusively concerned with internal tasks – vendors must create awareness, stimulate interest, close deals, etc. These tasks will still exist. However, they are conducted in a spirit that put the buyer's needs front and center.

Integrate Marketing and Sales
Instead of the assembly-line-like hand-off between marketing and sales silos, the IDC Customer Creation Framework calls for an orchestrated collaboration between the two functions. The fact that today's Buyer desires high-quality digital buying support and never, ever, goes off-line has HUGE implications. The digital dialog is most intense in the early stages of the Buyer's Journey. However, Marketing, as the owner of the company’s digital dialog, can never disengage, can never hand-off. The sales team cannot simply wait for the “good leads”. They may meet a prospective Buyer at any stage – at an event, for example, or in the hallway of a current account. Sales people must be prepared to serve the Buyer at whatever stage he happens to be at. Marketing must be more active enabling this entire sales conversation.

Smart: Data-driven
Finally, IDC’s Customer Creation Framework is smarter than the traditional funnel. The entire customer creation process contains data that can be harvested to use as a feedback system. By analyzing this data, barriers and opportunities will be revealed. Companies can then use marketing and sales tactics like knobs and levers to tweak the behavior and outcomes of the pipeline. Tested marketing campaigns can be strategically applied to build advantage. Digital technology in the form of the Internet is killing yesterday's funnel. However, digital technology is also giving us amazing tools to manage in the new one.

Read More

Symptoms of a Sick Sales Funnel

Can you believe that the sales funnel is 112 years old? Hmmm. Seems like a lot has happened since then. No wonder the ole’ funnel is showing signs of wear. IDC research shows that the time it takes for tech companies to create a B2B customer has increased by 15% in the past year. Is it time for a fresh approach?

The sales funnel first appears in a 1925 book by Edward K. Strong called The Psychology of Selling and Advertising. Strong attributes the funnel’s invention in 1898 to Elias St. Elmo Lewis, a sales manager for National Cash Register (NCR). St. Elmo Lewis, who later helped found the Association of National Advertisers, called his sales funnel AIDA for the four stages of “awareness, interest, desire, and action”.

The traditional funnel uses an industrial era paradigm that treats a buyer like a widget. With the right machine, a vendor can manufacture that widget into a product called a customer. In the industrial model, the marketing team works awareness at the upper funnel when buyers aren’t too interested. As soon as there is serious interest, marketing sends the “lead” down the assembly line, handing off to a sales rep whose must fabricate an opportunity and produce revenue.

The problem is…the traditional funnel doesn’t work that well anymore.

Alarming evidence of sick sales funnels show up in the data. Tech vendors now take an average of 19 months to create a large account customer, an increase of 15% in just the last year. Some of this lengthening is certainly due to uncertain economic times. Greater risk aversion has increased the size of the average buying team from 5 people to 6. But we can’t blame everything on the economy. Buyers, IDC finds, don’t like this slowness. They want vendors help to shorten the cycle. According to the IDC Buyer Experience study conducted earlier this year, buyers want to push for a 40% reduction in the time to buy.

Poor funnel health also shows up in unsustainable conversion rates. Research from IDC’s 2011 Tech Marketing Benchmark and 2011 Sales Productivity Benchmark reveals that it now takes over 1000 marketing awareness targets to get one sale.

Symptoms of a sick funnel. Beyond the data, tech vendors are experiencing the effects of their sick, out-dated, funnel approach. Here are some common symptoms companies complain about. Does your company experience any of these symptoms?

1. Bickering: Sales and marketing teams bicker over the number & quality of leads.




2. Bad Data: You don’t have the right data to judge performance, predict the pipeline, and refine strategy




3. Wrong Tools: Sales people don’t have the tools needed to sell, in spite of the fact that they have access to a tonnage of content.




4. Failed sales: Sales people fail to convert most leads. Marketing has no idea what sales plans to do with leads.




5. Funnel Gaps: Prospects fall out of the pipeline, but you’re not sure when or why




6. Silos: Sales team thinks it’s a waste of time to provide feedback to marketing and your marketing team rarely seeks input from sales.




7. Missing Messages: You can’t nurture buyers because you lack the right content
   

We need a new funnel framework. Much has changed since the sales funnel’s 19th century invention. Business is far more sophisticated. The Internet and social media have dramatically changed the way buyers buy. IDC CMO Advisory has guidance for a funnel makeover in the form of a new Customer Creation Framework.

Here’s an introduction to that framework in an IDC webcast called, “Transforming Lead Management: How the new buyer is killing your funnel (and what to do about it).” (The webcast is recorded. Register and you can get the replay.)

Read More