Home | Features | March 10 | The Long Hello: Making B2B marketing work for the bottom line

The Long Hello: Making B2B marketing work for the bottom line

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It seems to me that the power of marketing—what marketing can achieve commercially—is generally underestimated in the B2B environment.

Perhaps the marketing function is misunderstood, or perhaps its ‘voice’ doesn’t carry enough authority within B2B companies. Over the years, I’ve often got the impression that B2B marketing is viewed as a necessary evil—one of those things that just comes with being in business.

For me, two changes are needed in order for marketing to fully deliver its positive impact on the bottom line:
• marketers need to be clearer about their commercial goals
• companies need to set higher expectations for their marketing activities

Over the coming months, this column will look at B2B marketing and the commercial results it should be delivering—beginning with this overview of objectives, activities and measurement.

The two objectives in B2B marketing
• Cultivating consistent customers
• Preventing price pressure

CCC means keeping the customers you want by keeping them loyal. It’s also about attracting new customers and keeping them loyal. Its focus should be on what you are actually selling.

PPP is about margins. It’s how you communicate—and then deliver—the right outcomes to the right customers.

If marketing isn’t delivering bottom line results in terms of CCC and PPP, then two things are probably happening:
• The activities are not marketing activities and should perhaps be handled elsewhere—organising the firm’s Christmas party and golf days?
• The activities are not the right activities and should be re-focused or scrapped—promoting the wrong messages to the wrong people?

Cultivating consistent customers

I like the word cultivate because it implies caring for something so that it flourishes as part of a continuous process. Gardeners know that not all plants like the same things. Some plants like a lot of water, others don’t. Some can’t take too much shade, some can’t take too much sun.

In the process of cultivating customers, it’s necessary to understand that they don’t all value the same things. Neither do the decision-makers within your customers. For example, an FD may not be bothered about a product’s ease-of-use or technical functionality, but will be much more concerned with the likes of ROI and payment terms.

Preventing price pressure

Margins are everything because margins mean profit. I’ve always been uneasy with the concept of ‘added-value’. We all recognise it as being mainly a B2B term and, to me, it sounds like giving something for nothing.

As consumers, we are used to buying things for ‘free’—getting 20 per cent more toothpaste this week for the same money we paid last month.

The world of B2B understands structured pricing, but I don’t think it expects anything for free. Think of a company selling big earth-movers. They do a deal for four machines at an agreed price. Having done the deal, do they then offer a full-on, five-year maintenance programme for free?

If something is of value to a customer, surely it should carry a price? And that price should represent the monetary value of its contribution to their continued success. Equally, if a component of a product or service doesn’t create any value for the customer, then, bluntly, it ain’t worth the money. It does not mean that the entire product or service is worthless to all customers.

This is where segmenting and bundling comes into play - the process of taking products and services apart and then pricing each component. This can create flexibility in pricing and margin-maintenance because costs can be cut by removing the components that don’t deliver outcomes.

Marketing is not about selling. Marketing is all about buying:

• What are customers buying?
• How does buying contribute to their success?
• Who is buying?

CCC and PPP provide marketing’s strategic direction and ‘What-How-Who’ should determine its activities.

1. WHAT are customers buying?
Customers are buying outcomes that make a positive contribution to the continued success of their business.

All too often, marketing’s focus gets shifted from buying to selling. ‘We sell every variety of nuts and bolts.’
Ok. So, presumably it works like this: there is one gigantic pile of all sorts of nuts, and another huge pile of different bolts. Customers come and get all the nuts they need and then find the matching bolts. Right?

In terms of ensuring the continued success of their business, customers may also be buying: matched nuts & bolts; adequate stockholding; structured discounts; nationwide deliveries; training; accounting services; and warranties. They’re certainly buying more than just nuts and bolts.

2. HOW does buying contribute to their success?
Marketers must know how their products and services are used by customers: ‘If the bolts fail, the wings fall off….’ ‘If you don’t have these nuts and bolts, we can’t put the wings on. This means we can’t sell the planes....’

Pretty important bolts. Pretty important contribution, too, if they never break, are always in stock, if technicians are expertly trained how to fit and test them, if they are guaranteed to consistently conform to certain specifications, if you can supply them worldwide and track their usage and life-cycle.
Listening to customers is the only way for marketers to discover how products and services contribute to customer’s success. A sales team can provide insight here because they should understand each customer’s business, but marketing needs to develop its own perspective of the overall market.

3. WHO is buying?
The market is not just made up of customers. It may include wholesalers, dealers, solution-providers and consultants. There may also be user-groups, analysts, the media, statutory regulators and industry associations—all of whom can influence buying-decisions.

Who is buying? The answers to this question are so important because they pinpoint the targets for marketing communications and guide the creation of relevant marketing messages—they provide that all-important focus.

Measuring B2B marketing performance
If CCC & PPP are the objectives, then performance is measured by the market in terms of what it gives you—volumes, margins and loyalty.
If you accept that, then marketers should be examining the answers to questions like these:
• Are the outcomes you deliver communicated to all elements of the market—is there a consistent representation of the brand and how do you know this?
• Does the market-facing team believe the brand messages and act accordingly?
• What are the sales objectives for CCC and PPP? How do you know they are being met?
• For existing customers, how are you performing against sales forecasts? How satisfied are customers in terms of your contribution to their success?
• What are the requirements for lead-generation? How are leads ranked and how do you monitor their origins and the cost of attracting and converting them?
• How well is the ‘conversion chain’ working? Who monitors progress and performance in the chain?
• Do not confuse activity with achievement: measure outcomes.

Producing an ad is not an outcome. The response generated by that ad isn’t even an outcome. The impact that the response has on CCC & PPP is an outcome. So, measure that as part of a process that continuously links marketing activities to bottom line results.

Ranked as One of the Top B2B Blogs on the Net, Mark Eardley’s marketing blog is at: www.eardley.co.za

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