In the past, marketing was mostly about manufacturing a tremendous volume of activity and brand exposure in a given marketplace. Getting the right leads and converting them to customers ultimately came down to having more irons in the fire. This allowed companies in the “too big to fail” category to acquire customers based solely on brand recognition and branded searches.
This is no longer the case.
While driving awareness is certainly among the objectives of any marketing strategy, it is not the primary driver of success today. In the digital age, customers research competing solutions on their own and they often make buying decisions without even interacting with Sales. For this reason, getting the right leads and converting them to customers today is a matter of adjusting your marketing strategy and your sales process to the customer’s buying habits. It’s a matter of understanding who you’re going after and how they buy.
When you map out the target customer’s buying process and you juxtapose it with your own sales process, you can discover:
When you have this information laid out in front of you, you are able to see beyond personas because you begin to understand how the individual customer thinks and behaves.
You can then select appropriate tactics to mimic their specific buying process and lead them down the sales funnel. Unfortunately, the customer’s buying process is often hypothesised instead of quantified. At this step of the SMARTech Journey, we’ll overcome this issue by taking a rather unorthodox approach.
Your sales process is a mirror image of the customer’s buying process. So, the first step to understanding how your target customer makes a purchase decision is mapping the internal sales process at your company. In doing this, you can identify the reasons why customers buy and who your most desirable leads are—the types of customers that buy your solutions frequently and stay with the company longer.
For example: Let’s say that your company is selling software. You’ve taken the first step and now you have a clear image of the what the acquisition + retention hourglass looks internally, e.g. At the top half of the hourglass, you have 4 distinct steps before closing the sale—proposal, shortlist, negotiation and purchase. At the bottom half of the hourglass, you have initial deal value, upsell one, upsell two, and renewal + potential upsell.
At this point, the goal is to document how your sales organization functions by answering questions like these:
For example: Your company is a software provider and, up until now, you’ve found that the total business portfolio is spread in three distinct verticals: e-commerce, life sciences and higher education.
You’ve also established that you have net new sales in each vertical and there is one sales rep per vertical (three sales reps in total). There is also one account manager per vertical (three account managers in total).
It is time to discover how your net new customers progress through the upper half of the hourglass and how your existing customers progress through the lower half of the hourglass. The path from awareness, through purchase to customer loyalty will be different in each segment so, at the end of this step, you’ll have several separate sales funnels.
For example: Your organization is operating in three different areas of business. This means that three separate sales funnels are operating simultaneously—a life sciences funnel, an e-commerce funnel, and a higher education funnel. Each of these funnels has its own characteristics and metrics in terms of leads, sales numbers, sales cycle, close rate, initial deal of value, etc.
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The goal at this stage is to determine what has changed so you can uncover the threats and opportunities for the business. You can easily do that by overlaying the market segments that your company is targeting with the amount of net new business that it has attracted in each segment.
If there’s a degradation in performance while all other elements of your sales funnel remain unchanged, then you’re probably facing a saturated or contracting marketplace. In this case, you can proceed to benchmark the demand for your solution. You can examine search volumes in each target vertical and see if there is a correlation between relative search volume year-over-year and the drop in your sales.
For example: Sales of your software in the life sciences category are going down by 5% year-over-year and search volume for the category of tools your company provides within this marketplace is lowering by 30% year-over-year. The product hasn’t changed, the sales team hasn’t changed and the price model hasn’t changed. All of your data points to a consolidating marketplace. It’s only a matter of time before companies that offer this type of software start going out of business or merging with other companies and the cost to acquire a customer goes through the roof.
So, if life sciences is a dying market, your next logical move would be to find out whether there is potential for growth in the other two segments—e-commerce and higher education. And, if you spot any opportunities, you can bring up a discussion in terms of how to fuel more leads and hopefully make your marketing dollars drive more sales within these two marketplaces.
Understanding how leads from each segment behave inside the different sales funnels is going to help you define the quantity of leads that you need to be able to drive a new marketing strategy. Once you have that number, you can focus on quality. You can cherry pick the most desirable types of leads within each vertical—the customers that convert faster, spend more with the company and stay for the longest amount of time.
For example: Let’s say you’ve found that 60% of the company’s revenue is driven by 10 clients in the life sciences space. However, you’ve also found that this is a shrinking marketplace and you no longer want to mass market to this audience.
What can your company do in this situation?
You can repeat the success. You can re-focus your marketing dollars on customers that have the same attributes as the customers that convert best in the life sciences marketplace.
A common culprit in any marketing strategy is assuming that, next year, your company is going to be able to keep all of its market share. The life cycle of the marketplace can quickly disprove such assumptions. If you simply take your top-line revenue numbers and factor in a 90% probability that the business is going to do equally well this year, chances are your marketing strategy is going to get derailed.
For example: You’ve identified a 30% increase in top-line sales. That sounded like great news but, when you looked closer, we saw that, while your overall sales numbers are going up, a serious issue is looming on the horizon: The life sciences segment, which contributed 60% of last year’s revenue, is decreasing by 30% year-over-year in terms of interest levels and your sales in this market are decreasing by 5% year-over-year.
In this situation, the wisest decision would probably be to stay conservative and aim to reduce the share of life sciences down to, say, 45% of the overall business. Your company would then have to gear its strategy towards making up that delta in e-commerce and higher education. At the same time, internal stakeholders would need to understand that marketing dollars can’t be pulled away from life sciences. This marketplace is consolidating, the cost of customer acquisition is rising and your company needs to invest in protecting its market share in life sciences until you’re able to gain more market share in the other two market segments.
After going through this process, the Head of Sales, the Head of Marketing, the CFO and the CEO are ready to have a productive discussion regarding the company’s marketing strategy.
When your marketing is structured in such a way, you can quickly decide to divest or assign X number of dollars in a larger marketing budget based on data. You can start a narrative immediately because you are able to say, “This is what we are seeing in the life sciences marketplace and, because of that, we’re re-calibrating our expectations for a very small focus in this space. On the product development side, we’ll need to find a way to position our products more effectively in this vertical or we’ll need to target a new vertical because this marketplace is consolidating. Theoretically, we’re not going to feel the pain just yet but we’re going to have to continually re-focus because that market is going away for us.”
Unfortunately, this kind of discussion does not occur in most companies because the amount of internal alignment and cooperation that is required doesn’t exist and the technology alignment doesn’t exist.
At this step of the SMARTech Journey, you are able to understand who it makes business sense to go after and how to align your marketing and sales efforts with their needs. In doing this, you’re eliminating uncertainty and reasons for failure in your customer acquisition + retention.
When the target customer’s buying process is mapped out, you are ready to increase the amount of coordination between your Sales and Marketing departments and streamline the technology aspect of sales and marketing. You are ready to solidify your marketing focus and to steer your marketing activities in the direction that’s most promising for your company.