The changing role of marketing in driving sales revenues
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1 The changing role of marketing in driving sales revenues In this, the first of a three-part series of white papers focusing on customer acquisition in the digital age, we look at how the marketing and sales balance has shifted as the role of marketers has become much larger in the entire sales process. This new dynamic is particularly pronounced in business-tobusiness enterprises, where content-led inbound marketing and lead nurturing have become central to a healthy sales feed. Essential to this new marketingsales paradigm is having the right tools: marketing automation that paves the way for consumer trust and intimacy, and an effectively configured Customer Relationship Management (CRM) solution that is scalable and secure. These elements ensure that the new content-driven lead engine maximizes its engagement of prospects and the sales team is able to follow-up the leads more effectively and close the deals, by having a structured selling process in place, along with access to detailed business intelligence. This report also looks at the financial implications of an inbound strategy for companies, a subject that we will revisit in the second paper, which looks more closely at the role of the sales team in an inbound selling environment. The third paper will then look at how effective marketing analytics further enhances this approach and drives return on investment. Introduction: Why outbound marketing is faltering In today s digital, 24/7 access world, consumers no longer start their buying journey by calling or meeting a salesperson; those days are gone, no one goes into a conversation with a sales rep cold anymore. What s more, nobody wants to be approached by a salesperson if they haven t done their own homework beforehand. In fact, most people will simply be put off by a premature cold call, especially if their own initial groundwork hasn t been completed. Carefully paving the way for a sales conversation is the main job of marketers today. This painstaking, informationdriven approach has become essential in addressing the modern consumer s expectations and modus operandi. Today s connected consumer uses a variety of touch points to retrieve digital content: from web search to -fed web links, to blogs, to social media, to mobile apps. The reality is that potential customers do the majority of research online before considering any purchase including investigating products, services and the company itself in the digital space before even considering speaking directly to a representative from the business. According to Forrester, today s buyers are 67% to 90% of the way through the buying journey before they consider contact with a vendor, with many deferring all contact until they are ready to talk price. 1 The traditional outbound marketing approach, whereby a business goes to a potential customer with a sales pitch and takes control of the process, has been eschewed by the modern consumer. The figures back this up. HubSpot research shows that: 44% of direct mail is never opened 200 million Americans have registered their numbers on the national Do Not Call list 86% of people skip television ads Technology trade show spending is down 46%. 2 The proliferation of digital channels and availability of online content has led to a fundamental power shift when it comes to the information gathering phase of purchasing. To engage potential buyers, as well as existing customers who might purchase again, companies must take an inbound approach to marketing. This involves attracting buyers to your business hence the term inbound with enticing content that informs and entertains your target audience and plays a crucial role in establishing longer and stronger relationships. 1. Lori Wizdo, Buyer Behaviour Helps B2B Marketers Guide the Buyer s Journey, Lori Wizdo s Blog, Forrester.com, 4 October Awesome Marketing Stats, Charts & Graphs, HubSpot.com 1
2 Rather than having sales reps annoy prospects by hounding them before they ve even thought seriously about purchasing, companies need to offer compelling online marketing content that engages new and existing customers alike positioning the business as a subject matter expert in its field and a source of good information on the products and services that potential buyers are interested in. Then, when ready, potential buyers will welcome an approach by your organisation, or even come to you themselves. Increasingly, marketers are recognising that inbound represents the future of marketing and customer engagement. A survey by Crain Communications (publisher of Advertising Age) revealed that 60% of B2B marketers said inbound marketing was more effective than outbound, while 63% reported that the growing use of digital channels was firing their interest in an inbound approach. The research also showed that 34% of the marketers surveyed said the ineffectiveness of outbound techniques was directly driving a shift to real-time inbound marketing. 3 The implications are that, for many businesses, inbound B2B marketing is not just the approach of the future, it is already here and, if you are not already doing it, you d better start. Why and how inbound marketing works The proliferation of online communication channels available to consumers and digital tools in the hands of businesses has fed the rapid growth in inbound marketing. In its 2012 State of Inbound report, HubSpot found that 89% of marketers across the globe were maintaining or increasing the size of their inbound budgets, 4 while the latest report (-2015) shows that 74% are still doing so, including more than 90% in the B2B sphere, with just over 50% citing past success of inbound as the reason they have increased their budget. 5 Content is the real fuel that powers the inbound engine, especially when it is tailored to the individual. That s because it has been shown to work: 80% of business decision makers prefer to get information on a company via articles rather than ads, according to the Content Marketing Institute 82% of consumers like reading content from brands when it s relevant, research by the Content Marketing Association shows 61% of consumers feel better about a company that delivers custom content and are more likely to buy from that business, Custom Content Council findings reveal 90% of consumers find custom content useful and 78% feel organisations that deliver tailored communications are interested in building good relationships with them, content marketing specialist McMurry/ TMG reports. 6 The tools of the trade for the successful content marketer are pretty familiar to us now: blogs, social media, webinars, , web pages, newsletters, white papers and mobile apps. Just three years ago, HubSpot noted that the average budget spent on blogs and social media had tripled over the previous three years 7 and digital spend continued to skyrocket. A recent Gartner survey found that 51% of companies plan to boost their digital marketing budget in 2015, with an average increase of 17%. 8 We all know about the success that big brands have had using digital media: Coca-Cola now has 91 million fans on Facebook and engages with its audience through Twitter, Pinterest and Google+; 9 Redbull s lifestyle-led digital content has resulted in 3.7 million subscribers to its YouTube page; 10 Google has more than 2.8 million followers on LinkedIn. 11 However, you don t have to be a megacompany to make effective use of digital tools. In fact, HubSpot research has shown that small and medium sized businesses, those with fewer than 200 employees, are ahead of bigger firms in terms of utilising inbound tools such as blogs, social media and Search Engine Optimisation (SEO) for generating leads, although the gap is narrowing. 12 To produce content that wins over consumers and produces convertible leads through an inbound marketing approach, companies must first commit to this new strategy, starting with full buy-in from management on a longterm content-led approach that may see an initial drop in lead volumes, as outbound resources are withdrawn and inbound techniques are introduced. The goal is to produce content that will inform, educate and engage potential customers, positioning your company as 3. Inbound Real-time Marketing Solutions: The Right Message at the Right Time, Crain Research Insights (in partnership with Aprimo), June State of Inbound Marketing, HubSpot, March State of Inbound Marketing, HubSpot, September 6. Brian Honigman, Why Inbound Marketing? Statistics on Inbound vs Outbound Marketing, Jumplead, 29 November State of Inbound Marketing, HubSpot, February Gartner Survey Reveals Digital Marketing Budgets Will Increase, Gartner.com, 3 November 9. David Moth, How Coca-Cola uses Facebook, Twitter, Pinterest and Google+, Econsultancy.com, 17 April Allison Banko, Redbull Media House s Advice for Successful Content Marketing, MarketingSherpa, 19 September 11. Linkedin.com/company/google 12. State of Inbound Marketing, HubSpot, September 2
3 an expert that knows the marketplace, understands customers needs and has a solution that addresses them. Essential to achieving this level of tailored content is capturing and using data on each customer and creating a content map that outlines different information journeys for individual leads, depending on each prospect s engagement with your brand. Monitoring and developing the relationship at every stage The drip-feed of appropriate and appealing content that draws prospect interest is critical to nurturing leads until they are ready for a buying conversation. Nurturing leads by giving them the information they need, when they want it, without a hard sell is central to a successful inbound strategy. Forrester research figures show that companies that excel at lead nurturing generate 50% more sales-ready leads at 33% lower cost, while Annuitas Group figures show nurtured leads make 47% more purchases than those that are not. 13 Indeed, in, more than twice as many companies cited inbound (45%) as their primary source of leads versus outbound (22%). 14 To successfully execute an inbound approach, companies need to establish the infrastructure to build a dialogue with each prospect. Having the right CRM software in place and configured to support inbound activity is essential. By using a CRM solution integrated with a marketing automation solution, marketing teams can then use the data collected online to nurture leads, with the additional benefits of supporting the sales team with prospect intelligence, increasing sales conversion rates and building a new business pipeline. CRM data is critical for prospect and customer analysis. Companies need to track Customer Lifetime Value (CLV) to determine which clients are most profitable, which leads are similar and thus require the most focus and resources and which leads are not worth further investment or effort. Firms also need to use the data to effectively segment customers. This is absolutely vital to the inbound marketing process, as it enables you to profile and group potential buyers in accordance with their similarities to known clients and use that information to map out common content plans. The result is more effective targeting and personalisation of the content drip-feed. Companies also use CRM systems to track the progress of prospects and returning customers in their buying journey and make sure that all the intelligence on them is maintained in one place. Hand in hand with monitoring customer interactions goes the use of marketing automation, which allows you to time the execution of a content map, progressing communications at the right stages. Gartner research shows companies that automate lead management see a 10% increase in revenue within six to nine months 15 and it predicts that by 2020 customers will manage 85% of their relationship with a business without talking to anyone within that organisation. 16 Marketing automation also provides insight into which leads find your content engaging, what information existing customers are hungry for and when you need to tweak your communications based on non-response or other feedback. Integral to effective automation is leadscoring, which usually involves placing a point value on each type of customer engagement and using that information to trigger further interactions and eventually a full sales approach. Lead scoring is particularly critical in B2B marketing: 60% of B2B companies have lead scoring in place or plan to in the next year, according to a Demand Gen Report survey. 17 Finally, if lead scoring indicates that a prospect is ready for a buying conversation, the information about the targeted buyer s needs, interests, preferred means of communication and other intelligence can be passed onto sales via the CRM system. This creates a feedback loop that better arms salespeople with information on each prospect, garnered via inbound marketing, that can help close the deal and, if the potential buyer is not ready for the sales conversation, sales can pass the lead back to marketing for further nurturing. The financial sense of inbound and the cost of ignoring it Not only is the tracking of prospect and customer exchanges a crucial element in a content-led inbound marketing strategy, so is monitoring the return on marketing investment. Yet fewer than half of businesses measure their marketing ROI, according to HubSpot, even when this essential analytic measures the financial impact of marketing activities. ROI helps marketers unlock budget by demonstrating the effectiveness of an inbound strategy to management. Until the financial success of inbound is proven, many company boards will remain sceptical. Measuring ROI, however, allows marketers to compare the cost 13. All the Marketing Statistics You Need, HubSpot.com, 14. State of Inbound Marketing, HubSpot, September 15. All the Marketing Statistics You Need, HubSpot.com, 16. Gartner Customer 360 Summit 2011, Gartner.com, March Brian Anderson, Successful Predictive Lead Scoring Requires Rich Data, demandgenreport.com, 25 March 3
4 per lead for inbound marketing against traditional outbound tactics. The latest HubSpot State of Inbound survey reveals that the cost per lead for businesses with under 200 employees using inbound marketing is well under half that of those relying on outbound and just over half for much larger companies, and that 35% of companies that measure ROI saw it rise year on year after switching to an inbound strategy. 18 Not only does an inbound approach push down marketing costs, it drives up sales revenues and profits. Using research from Aberdeen Group, HubSpot, Sirius Decisions and others, technology company, Aptera, modelled the ROI of inbound versus outbound campaigns and found that the return on inbound was double that of outbound, as was marketing net profit, while marketing cost per sale was roughly half, 19 highlighting the fact that sticking to a traditional marketing approach will hurt your bottom line. A similar modelling exercise by business-to-business marketing agency, Iconsive, showed that monthly net profit for a B2B company would nearly quadruple roughly a year after it moved from an outbound to an inbound marketing strategy. 20 An MIT Sloan School of Management graduate s study into the impact of a shift to an inbound strategy on 5,000-plus HubSpot clients showed that: switching to an inbound strategy produced 6x more leads and 2.4x more website visitors per month within one year the conversion rate of leads increased by 73% 30% of the companies surveyed reduced their sales cycles 69% of customers saw an increase in sales revenue. 21 Evidence from case studies reinforces the findings that lead conversion rates go up, marketing costs go down, or budgets go further, and sales revenues soar when an inbound marketing approach is implemented: Tenon Tours: The travel company saw a 129% rise in sales revenue within two years when it adopted an inbound approach with targeted lead nurturing; site visitors increased by more than 50%, while overall lead volumes grew by more than 500%. 22 NSK Inc: When it switched to an inbound strategy, the IT consultant saw an increase of more than 200% in new client revenue, a 200% rise in lead volume and a 50% decrease in paid marketing spend, while the number of unique visitors fitting its target criteria increased by 100%. 23 Fisher Tank Company: The leading US welded steel tank manufacturer saw a 3000% increase in leads, a 500% rise in quote requests and US$3.4 million in sales pipeline growth when it implemented an inbound strategy. 24 Atlas RFID: The B2B ecommerce firm saw leads grow by 7.5x, CLV increase by 128% and revenue rise by 50% within a year of switching to an inbound marketing approach. 25 Conclusion: Traditional marketers need to raise their game In the age of 24/7 mobile digital communications and Big Data, traditional outbound marketing is no longer the way to engage prospects or existing customers. As discussed, modern consumers and business clients don t rely on salespeople to provide information and don t welcome hard-sell pitches. They do their own research in their own time and want greater control over the whole buying process. Buyer expectations have changed fundamentally and companies need to adjust to this altered commercial paradigm. Businesses of all types risk losing ground and profits to competitors if they do not begin to implement an inbound strategy, particularly if the company has a B2B focus. Consumers have a wide range of digital channels at their fingertips to help them research products and services, comparison shop, interact with companies and make purchases. As this white paper outlines, companies must engage consumers on their terms in the digital space, drawing them in with useful and thought-provoking content, rather than pitching and pushing their wares. Content-led marketing is a demonstrably effective way of engaging potential buyers and attracting them to your brand. The short term cost of shifting to an entirely new approach will be outweighed by the longer-term gain, as lead volumes, conversions, sales revenues and margins climb, while marketing costs ease. Businesses thoughtfully put in place the infrastructure and tools necessary to win over the modern, digital, savvy consumer. This includes not just properly configured CRM, but social CRM, data analysis capability and marketing automation. Companies also need to establish processes to score leads, calculate CLV, segment prospects and customers, create individual content maps, track interactions and target communications effectively. These elements are critical to successfully transitioning to an inbound marketing strategy that nurtures the right leads, helps close deals and makes better financial sense than a traditional outbound approach. 18. State of Inbound Marketing, HubSpot, September 19. Ron Mattocks, The ROI of Not Doing Inbound Marketing, aptera blog, aptera.com, 11 September 20. William Steward, Which is More Expensive? Inbound vs Outbound B2B Marketing, iconsive.com 21. Tina Yau, Return on Investment from Inbound Marketing through Implementing HubSpot Software, Massachusetts Institute of Technology, Sloan School of Management, January 22. Tenon Tours Sees 129% Increase in Revenue with Inbound Marketing, HubSpot.com 23. IT Consultant NSK, Inc Sees 207% Increase in New Client Revenue Using Inbound, HubSpot.com 24. William Steward, 9 Inspiring Inbound Marketing Success Stories, iconsive.com, 24 March 25. ibid 4
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