Business to Business: The Cinderella Discipline?
07 January 2009
We’ve been presenting and working a lot lately in the business to business category and it’s struck me just how interesting some of the work in this sector is….and yet it seems to fall into that perennially “un-sexy” space.
Taking the Cinderella analogy to its logical conclusion, this makes business to consumer marketing the big brash ugly sisters that get their way by shouting longer and louder – which has a ring of truth about it.
In the mid 1950’s David Ogilvy noted that business to business marketing can be notoriously difficult to measure and thus determine its effectiveness…and in many ways much B2B marketing has not moved on since then, with a large number of businesses not really knowing how effective their marketing campaigns are. Here are a few ideas and approaches that can help.
Data Visulisation
This is an area which has captured a lot of attention recently and basically boils down to making data more accessible, useable and interesting for non-data users – which ultimately leads to data being at the heart of decision making, rather than perhaps sitting on the periphery.
The approach is to combine disparate data sets and make the outcome visually appealing and dare we say it – Sexy Data!! Our hope is that Data Visulisation will do for data what the iPod did for MP3 players.
Net Present Value
Net Present Value on the other hand is something every CFO and Finance Director loves. It deals with customers being the units of future cash flow in any business, and thus without customers – there is no future cash flow, thus no business. When we look at customer value over 5 years, it becomes even more apparent that identifying and hanging onto your best customers is the key to a successful business….along with identifying what makes those customers your most profitable, and then finding more like them.
The other area that NPV modeling highlights in the B2B category is how expensive is it to win a new customer, especially if the full cost of sales staff are added to marketing expenditure. The maxim of “reach the businesses that count, don’t count the businesses you reach” is especially true in this instance.
Net Promoter Score
Net Promoter Score has been well publicized in the business to consumer market, but the approach has enjoyed considerable success. The File Net case study, which can be found in detail at http://www.netpromoter.com/site/ is a really interesting example of applying customer centric principles in the B2B market….with some outstanding results.
Check these out:
• Increased Net Promoters ® from -6.73% to +20% (Net Shift of +26%)
• Acting on Key Drivers, Drove Over 30 Company Wide Improvement Initiatives
• Increased Revenue from Existing Base from 72% to over 80%
• Increased Net Profit 10 percentage points
• Increase “Positively Ecstatic” Customers
• Database with customers willing to serve as references increased from 100 customers to over 600 in 12 Months
• Published over 100 Customer Success Stories
• Increased Press Activity
• Analyst Validation – Gartner/IDC/Forrester briefings on program
So how did they get there?
They collected the feedback, but more importantly they acted, in the front lines, on the data.
One of the things they learned after the dot-com bust was that they had to invest into their existing customers – up-sell and cross sell. As they stated, nobody will buy from you if they do not know or value you. Because of this, mining their existing customers was the core of their strategy over the last few years.
They had new products coming to market so central to their goals was to increase revenue, sales efficiency, increase customer and partner loyalty, and to build barriers to entry for competitors, all while selling the new products into the installed base.
FileNet started with a simple business problem that sounds familiar – they had, “No systematic process or program to generate advocates of our products and improve customer loyalty”.
This resulted in a fragmented client relationship model; limited visibility into the customer’s enterprise; a fragmented customer-centric culture; and some departments that were engaged but most that were spectators. Employees, like the engineers, did not want to visit customers, especially unhappy ones.
One of the first things they did was to set goals, including Net Promoter targets for all employees worldwide. They also got executive sponsorship from the start. They built communication programs around this approach to drive compensation strategies and focus on response rates.
But the key was they acted! “Hot sites” was a Monday morning event where they reviewed customer issues.
Put the customer in the center of everything
Relationship with the customer was a top company objective. From a roadmap point of view, they started with a customer engagement initiative which resulted in a customer loyalty initiative, from Satmetrix, which was launched as one of the CEO's top 5 initiatives. From this program, they identified three areas to further investigate: a product lifecycle; leadership development; and development lifecycle initiatives.
They created a loyalty council, which was focused on direct customer action for all “trigger 6” surveys (detractors). They tied this into their CRM and set company targets around this. There was a case-by-case direct customer engagement in all functions – both front line and back office.
They also set some goals – like calling on existing customers at least 4 times a year – even if the customer had no budget! They also focused on segmenting customers as tune-up accounts or development accounts, which resulted in specific engagement strategies.
Another way they got value into the CRM system was to integrate the customer data so sales people could easily link into their customers’ experience data inside the CRM system.
Finally, every employee had a part of their variable compensation tied to NP or other customer engagement initiatives. They also had a sales contest where they could win a customer experience award, for which the sales teams were judged on a number of customer metrics, including the NP score, response rates and revenue. This prompted a fierce global competition between all the sales teams to win this award.
Here are some of the key takeaways:
• Do not over-complicate!
• Start simple and direct
• Create earlier and stronger transition/change management activities
• Share information across all disciplines
• Tie compensation to customer Loyalty
• Take a programmatic approach
• Consider this a component of your corporate fabric
• Prepare the company
• Education/Roundtables
These are significant across a number of areas – not least because both revenue and profit increased nearly 10% over the first 12 months and continued to such an extent that one of their rivals – IBM – bought them.
So like Cinderella, a happy ending!
Going to the ball
The best piece of advice I remember in terms of business to business is that “businesses are people too – just like you and me!” And yet we often see B2B marketing as a remote and sometimes sterile discipline, dominated by ANSIC codes and employee counts. These are all important in helping segment and understand markets but like all marketing, it really starts to work when we can solve a consumer’s rationale and emotional needs.
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