Three Steps to Optimizing Marketing Spend and Increase Revenue
Segmentation and Nurturing are two of the most powerful steps in our 12-Point Revenue-Focused Marketing Process. Note that they are #3 and #11 on the list. Click here to view an infographic with more details.
Most companies prospect too broadly. An over-simplified reason they do this is because marketing is hounded by sales for more leads. Marketing is also a prime target for cost cutting. So, “get more leads for less money” is not an uncommon ask. The result – low-level, unqualified suspects that end up in the black hole called CRM rather than a consistent flow of highly qualified, sales-ready leads.
One way to fix this by doing a better job of segmenting the target audience (TAM – total addressable market) and matching the right media against the right targets at the right times. I use the word “times” deliberately as the touch cycle includes multi-touch, multi-media and multi-cycle programs that are delivered, measured and tweaked over time.
As an example, here is a simple segmentation approach:
Top one-third of Prospects – never see the inside of a marketing automation solution. Marketing/Sales approach is one-to-one. Approach to this group is highly personalized.
Middle one-third of Prospects – you invest less than the top one-third of prospects, and more than the bottom one-third. This group qualifies for a one-to-many approach… calls, voicemails, emails and limited direct mail (in appropriate cases) and the approach is personalization at scale.
Bottom one-third of Prospects – Fully automated, programmatic approach. With this group you cannot afford “high-touch.”
Note that prospects are constantly moving from one group to another. This requires art and science and while it is outside the scope of this blog, I am happy to talk with you about it – just ask.
Here are three steps you can take to optimize marketing spend and increase revenue:
Non-decision makers outnumber valuable prospects by a factor of 10:1 when you look at results from “inbound” campaigns. We have found that senior executives are not as responsive to marketing automation and other digital marketing as their junior counterparts. Senior execs do not want to be treated like the human equivalent of a pinball—capturing your attention only after hitting the right bumpers and scoring enough points. More importantly, higher-ranking executives are about 2.5 times more likely to respond to a quality multi-touch campaign (calls, voicemails, emails, and direct mail) than are their direct reports. Whether or not they have assigned junior staff to do research, it pays to reach out directly to your decision maker—in the way he or she prefers. If your targets are senior, I recommend you assess a multi-touch campaign against an automated marketing effort to determine which method results in more revenue. See more on this herein.
Pull the top one-third of your prospect base (larger organizations, in the right verticals, with the optimal environment, etc.) out of automated marketing. If you wait for the best targets to raise their hands by downloading a whitepaper or attending an online seminar, you are going to lose to more agile competitors. Waiting will result in one of the following outcomes: you are simply out of the running unaware of an evaluation you could have won; or you are column fodder in an evaluation managed by a competitor that has already won.
It should come as no surprise that I recommend against email as the exclusive channel to reach prospects: Automating the right process is smart. Using automation exclusively is not. SiriusDecisions’ warns against “responding to an inbound inquiry solely with outbound email.” Marketers must continue conversations online and through integration and coordination with additional outbound tactics (e.g., direct mail and personalized tele-prospecting outreach).”
Automated marketing does make sense in situations including renewals, consumable purchases, online seminar reminders and follow-up, and automated follow-up after a prospect downloads content. (There are more, of course.) The problem is that the scoring algorithms are not validated or calibrated, so results are often underwhelming.
My recommendation is that in addition to the one-third of prospects that are more strategic (discussed in #1 above), you hold back an additional 10% of prospects (from the pool of all prospects that are recipients of automated marketing) and test a multi-touch approach to reach them. This will help you reorder the list of prospects (validate and calibrate) so that your investments are directed toward the best prospects.
By picking up the telephone to talk to people, you will receive feedback on content they value and content they ignore. You might re-segment your target market and shift segments into the one-third while some of the previous top one-third drop down. In talking with prospects, you will glean more insight into their pains, their perceptions about solutions, and their actual plans than you ever will via scores from marketing automation.
I am not suggesting you ditch marketing automation altogether. Just measure the benefit of human touch against the incremental cost.
You might also learn, as we have by conducting the testing that I am describing here, that high scores do not actually translate into better prospects. In fact, just the opposite can be true.
As an example, for one IT security company, consumers of up to five pieces of content were much better prospects than those individuals who consumed six or more pieces of content. In most companies, leads are sent to the sales force too soon. However, in the case of the IT security company, if only those prospects who consumed six plus pieces of content were sent to sales as leads, they would be receiving the worst possible prospects.
Marketing automation has made it possible to get more poor-quality leads to sales faster than ever. But it does not have to be that way.
If you follow my advice, you will find yourself doing more testing and measurements leading to better results.