Marketing Accountability is NOT a new concept

I have seen several blog posts recently that practically suggest that Marketing Accountability is a new concept. It is not new. Marketers have measured, and were held accountable for their results for decades! Primarily B2C marketers. Marketing accountability may however be new for some B2B marketers. Why?

B2C companies have used radio, TV, print advertising, and in store promotions, for many years, and measure the costs, impact to consumer behavior, and the cash register. The investment and the reward metrics are well beyond what many B2B marketing firms can imagine. $500K for software databases and associated campaign management tools, millions for the actual media, and tens of millions in returns within weeks of the campaign launch. By golly these marketers are accountable, and they must be laughing at the B2B marketers who think they are inventing marketing accountability!

Why has it taken so long for B2B marketing metrics to achieve the same level of sophistication as B2C? I believe there were several significant hurdles to B@B marketing accountability that marketers are now surmounting with the help of marketing automation.

B2B has multiple people involved in a single sale

In B2C you segment, target your list of consumers, launch, and measure results all within weeks in most cases. In B2B there can be many people involved in a single purchase. There can be a committee of decision makers. Different people can be involved in the sales cycle at different times; did purchasing ever elbow their way into your negotiations at the last minute and delay the contract a month? So if you are to successfully deploy marketing metrics you have to be able to gauge the aggregated marketing influence on all the stakeholders as it relates to the single final outcome. This is not as easily done as one promotion to one individual to drive one result.

B2B has a longer sales cycle
Length of the sales cycle is probably the most significant difference between B2B and B2C marketing. In B2C typically the purchase price is less than $100, so a single promotion can alter their perception of the brand and motivate the potential buyer into action next time the need arises. In B2B the sales price is probably in the thousands and the product or service is more complex and requires a human to consummate the deal. The length of the sales cycle can vary from weeks to years for the same product. ie you can have a "long tail" with a significant number of deals taking more than twice as long as the average. So if you are to calculate the Marketing ROI for some campaigns, how long do you wait for the deals to come in? The average sales cycle period, or twice that period? That could be 2 years!

The common fruit fly is very popular with geneticists because it can go from egg to an adult ready to breed in less than 10 days. So they can do lots of tests in a single year. The same applies to B2C. With a short sales cycle, marketers can test a campaign, wait a few weeks for results, adjust, test again, adjust, and then roll it out to a much larger region. For B2B with the longer sale cycle this is often not possible. They get one shot, and the real results based on revenue won't be known for a year, or two. One common error you see in B2B is with some marketers getting impatient for results and switching tactics before the long term effect of a campaign can be measured.

Multiple interactions with multiple media
Another challenge with B2B marketing is that we tend to have many interactions with prospects before we get to a sale. There can be trade show interactions, web site visits, direct mail, email offers, webinars and so on. So the final revenue won has to be credited to multiple interactions, to multiple stakeholders, all using multiple media and varying offers. Phew.

B2C marketing metrics are better suited for statistical analysis
Another item that works for the benefit of B2Cs is having big numbers for statistical analysis. If we want to measure something with a 95% confidence level, +/- 5% on a population of 10000 or more, we would need 400 in our sample size. With B2C they can do tests on one or two metropolitan areas, with a few million consumers and get statistically valid results. For B2B, 400 closed deals could be 100% of our annual sales! So it is much harder to apply statistics to smaller sample sizes and draw believable conclusions.

B2B Marketing Metrics for Marketing Accountability
The B2C marketers amongst you are now saying, "stop whining and do something about it". Okay so what can we B2B marketers do to increase our marketing accountability.
Create reports that aggregate all marketing influence per opportunity from all prospects related to that account. Get around the long sales cycle issue by measuring marketing influence on the shorter time period steps that make up the sales cycle.

Measure the aggregated marketing influence on every closed won opportunity
Measure the marketing influence on every opportunity in the funnel
Measure the Lead conversion rate at every step (from Open, to MQL, from MQL to SAL, from SAL to SQL) based on marketing influence and lead source
Measure the performance of each offer as it relates to opportunities.
Measure the duration time of leads in each state (measures nurturing effectiveness)

B2B marketers are now getting sofware and database tools in the form of Marketing Automation that can measure their influence on the sales funnel and help drive marketing accountability. B2B are ready for a transition to data driven marketing. And the good news is that instead of costing $500K like the B2C software products, they are less than 10% of that number! So there is no excuse anymore! Direct Sales has traditionally been the most accountable organization in the company with up to a third of its members turned over every year for not meeting plan. B2B marketing may have been the least accountable organization, but no more. The sales and marketing divide can be bridged with shared accountability for results.Don't expect what you don't inspect.

For those of you attending the CRM Evolution conference next week be sure to check out "B2C lessons for B2B Marketing" by Patric Timmermans.

-Kevin

Comments

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Posted by: coach wallets | June 27, 2010 at 07:31 PM