We’ve only just picked up on this Forbes article – it’s a few months old now but so good we couldn’t let it go.
By Oskar Lingqvist, Candace Lun Plotkin, Jennifer Stanley of Mckinsey & Co.
While B2B organizations have embraced the idea of customer-centricity, many have yet to adapt to the reality of customer behavior. That’s resulted in millions of marketing dollars being misspent and potential sales lost at a time when companies can ill afford it. In fact, our work with more than 30 marquee B2B organizations around the world shows that half or more of all marketing spend is doing little to influence the purchasing decisions of top customers and providing little help to the sales people calling on them.
To right that train, B2B organizations need to develop a much deeper understanding of the modern Customer Decision Journey (CDJ). Where the old sales funnel assumed a linear purchasing path – customers take in information; narrow down their choices; kick the tires, and submit the purchase order – the CDJ moves away from the “funnel” way of doing things. It recognizes that the decision process, in fact, is anything but linear.
For B2B CMOs and heads of sales, adopting the CDJ has helped shift as much as 40 percent of marketing spend to activities that generate higher ROI. We’ve seen companies boost sales by an average of 5-10 percent and customer retention by an average of 30 percent.
1. Find out what matters to your decision makers
It’s not enough to identify the decision makers in an organization. For marketing and sales activities to be effective, companies need to focus on those points in the decision journey where they can be most successful in influencing those decision makers.
Understanding who those influencers are and what matters most to them in making their purchasing decisions gives marketing and sales leaders the insight needed to gauge where their efforts are likely to have the greatest impact. One chief marketing officer, for instance, learned from customer interviews that 70% of the marketing budget and 40% of the sales efforts were not spent in places that actually influenced the customer’s purchase decision. They were either over-investing in some areas or under-investing in others with the result that they were leaving money on the table and missing out on deals they might otherwise have won.
One high-tech OEM, for instance, counted both large corporate buyers and small operators among its customer base. Both looked for different things. Corporate buyers, usually led by finance chiefs, viewed the products as a way to improve cost and operational efficiency so paid special attention to the RFP process. Small operators, by contrast, were often owned and managed by individuals with technology backgrounds who followed the latest developments with interest and were active researchers. Knowing who was holding the strings within those segments clarified what stages of the CDJ to zero in on.
2. Channel resources to spend where and when it matters
Understanding what drives customer decisions means that marketers can make smarter, more informed decisions about where to allocate resources. Prior to using CDJ methods, the sales and marketing team at a large materials company did what it did best: nurtured long-standing key accounts and kept tabs on new opportunities within two of its biggest verticals, the government sector and commercial real estate developers. It was a sales forward approach focused on generating and qualifying the lead, making the pitch and closing the deal. Still revenue growth remained lackluster.
So their commercial leaders analyzed their customer base, interviewed key players, and came away with a better idea of where to focus its resources along the CDJ. If it was going to win the public sector, for instance, the company realized it had to broaden its appeal and court relationships not just with public works officials, but to local distributors as well since interviews had shown most facilities managers turned to them for recommendations and advice during the research stage of the CDJ. This insight told sellers not only where and when to redouble their relationship-building efforts, it also told marketing where to pull back, such as in trade show spend, which research showed had little influence on the buying outcome.
3. Foster partnership between marketing and sales
We’ve seen adoption of the CDJ also address a nagging issue in many B2B organizations: poor communication and coordination between marketing and sales. By developing a common understanding of the CDJ and those battlegrounds where they needed to compete for customers, marketing and sales can communicate more clearly and focus more effectively on activities that win customers.
Without understanding your customer’s decision journey, it doesn’t matter how “customer-centric” you are. Building your organization and programs around the CDJ model means more effective marketing and more successful sales.
For the original post go to:http://www.forbes.com/sites/mckinsey/2013/04/24/the-b2b-customer-decision-journey-the-route-to-increased-sales/