Transform Your Customer Journey and Accelerate Growth

Growth for B2B is hard. It used to be that you could accelerate growth with huge customer acquisition. Ramping up your sales and marketing is not enough to sustain growth. Today, the best companies are growing through customer success. That’s why I interviewed Kia Puhm (@kiapuhm), CEO at K!A CX Consulting to talk about customer success. […]

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How to Attract B2B Buyers with Killer Content

Content marketing is booming. According to the 2017 B2B Content Marketing Trends, 39% of companies are increasing investment in content marketing. And yet most companies are not creating effective content.  Want proof? Two of the leaders in B2B funnel benchmarking, SiriusDecisions and Forrester, will tell you that inquiry-to-closed-won conversion ratios are often below two percent […]

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3 Good Questions to Align Strategy, B2B Marketing, and Sales

Have you intentionally linked your sales, b2b marketing, and strategy? B2Bmarketingstrategy

If not, you’re in good company.

Most companies struggle with this according to the Frank Cespedes, author, and Senior Lecturer at Harvard Business School, “selling [or marketing,] no matter how clever and creative can’t generate good financial returns unless it’s connected to strategy.”

I met Frank while we both spoke at an event in Santiago, Chile. We had a memorable time sharing ideas, and research. I thought Frank had a practical approach to aligning sales and marketing. So, I reached out to him and interviewed him about what he’s learned through his research for his most recent book Aligning Strategy and Sales (Harvard Business Review Press).

Writers Note: I edited this interview for length and grammar only.

Brian: What inspired you to write about Aligning Strategy and Sales?

FrankCespedesb2bmarketingsales

Frank Cespedes

Frank: Despite decades of attention to so-called strategic planning, there is remarkably little research about how to link strategy with the nitty gritty of field execution especially sales efforts [and marketing].

American companies annually spend about $900 billion every year on sales efforts. That’s not marketing. That’s sales compensation, the travel and entertainment expenses, incentives, the infrastructure, etc. To put that in perspective, Brian, that amount is more than three times what companies spend on all media advertising– Super Bowls, everything else. It’s more than about 40 times what they spend on digital marketing and it’s more than 50 times what they currently spend on social media.

That’s a lot of managerial time and effort as well as money, and the reality is that sales forces are, by far, the biggest and most important part of strategy execution for most firms, especially in B2B markets.

How did you develop this idea?

I was an academic at Harvard Business School for about 11 years working my way up the hierarchy and always was doing research in sales related areas. My research started with distribution channels, B2B distribution channels, morphed into sales.

Then I ran a business for 12 years. And then I came back and said, ‘I’m teaching strategy. I know something about sales. Let me see what people have written about the connections between strategy and sales.’

What I found was a gap: lots of books and articles about strategy, and countless books and articles and training programs about selling, but virtually nothing about connecting these activities. So I figured two things.

The world does not need another book about strategy.  And I don’t think, to be blunt, the world needs yet another selling methodology, but there just isn’t much if anything about linking the two and that was the gap that I set out to address, practically and based on the research about these topics, not one-off anecdotes.

Brian: If you had only three questions you could ask executives to diagnose sales and strategy alignment what would those be?

Question 1. Do you have a strategy and can you articulate it?

Most companies and most senior executives, confuse strategy with other important but separate things like vision or mission or purpose or values. Those are important, but they are not the same as a strategy.

A strategy at a minimum always has to pass the following three tests:

  • External consistency. In other words, does our approach deal with the threats and the opportunities in the external market today, not yesterday?
  • Internal consistency. How do we put things together in sales, in marketing, in operations so that two plus two equals at least four? It’s internally consistent but also if we have some kind of competitive advantage, it’s going to take longer or cost more for competitors to imitate us.
  • Dynamic consistency. Every strategy has a sell-by date. No strategy is forever. It’s very unlikely that any company is going to get an e-mail from the marketplace that says it’s time to change. It’s not the responsibility of the market to be kind to any company and its strategy.

It’s the responsibility of managers to understand what’s going on in their market and adapt. That’s what I mean by dynamic consistency. If you have a strategy, you should be able to articulate its core components—Objectives, Scope, Advantage–in 50 words or less.

Question 2. Are we clear about the market segments where we do and don’t play and what are the buying processes?

These questions are fundamental to making decisions about Scope in any strategy. And in those areas where we choose to play what is it that we do or can do that, we believe us some advantage? You have to be clear about that if you’re going to do effective selling because where you play drives the buying processes that your sales people will encounter, and again this is central. Value is created or destroyed in actual interactions with customers and their buying processes, not in meetings or planning documents.

Question 3. Do we know what are the important sales tasks our sales people must do to succeed in the marketplace?

Sales tasks are very actionable things. They ultimately tell us where we should and should not spend, money, time, effort, investments in what areas of the of the conversion process in the sales funnel. And the key tasks for any company are determined by their strategy and what that strategy means for the segments and buyers the sales force deals with; the tasks are NOT determined by a generic selling methodology. This is important because, despite what most sales trainers still preach about selling and sales people, the fact is that the most important thing about selling is the buyer and their buying processes, not the personality or pitch of the seller.

I think my three questions are relatively simple but I believe that they’re fundamental. Do you have a strategy? Are we clear about where we play and not play in the buying processes in those areas where we play? And what are the important sales tasks?

Brian:  What are your best tips for getting sales and b2b marketing aligned around strategy?

Frank: Well, I think the questions I just articulated in answer to your earlier question are also relevant here because again there is no such thing as effective marketing or effective selling if it’s not connected to strategic goals and business objectives.

And many, many marketing and sales managers are very often either unaware or indifferent to the strategic and financial goals and objectives in their companies. They need to align with those goals and, conversely, they need to   speak up and earn a place at the C-Suite table. Then, they have to be accountable.

Using the Seller’s Compass

Let me just say one thing about marketing, one thing about sales. The figure “Seller’s Compass” helps explain the process of aligning sales, marketing, and strategy (used with permission). b2bmarketingsellerscompass

In marketing, I think your work [Lead Generation for the Complex Sale] is very relevant to lead generation. We all know the data. This data has been remarkably consistent for years so there’s obviously something systemic going on with respect to what many people call the lead generation black hole.

How many leads from marketing are actually used? Lots of money is currently wasted, and that’s the right verb. It’s wasted on social media and other chic tools, and many marketers are ironically proud of that. They’re proud of the lack of metrics currently.

I wrote something about this last year in Harvard Business Review, Is Social Media Actually Helping Your Company’s Bottom Line? That gets us right back to one of the core aspects of marketing in many businesses, at least in relationship to sales and lead generation: what’s a good lead and are we clear about that? No company or marketing manager or sales manager can correctly answer that question independent of their firm’s business strategy.

That strategy helps to determine the important sales tasks (including relevant and efficient lead generation) and, as the “Seller’s Compass” figure indicates, the job in sales management is to get actual selling behaviors to align with required sales tasks.

Three Levers to Align B2B Selling Behaviors with Tasks

In turn, managers basically have three levers to do that: People (hiring, training, development), Sales Force Control Systems (including organization, metrics, and compensation plans), and Sales Force Environment (how sales managers manage and apply the control systems, including performance reviews and links with other functions in the company).

On sales, I think what they need to talk about compensation and incentives. The data has been remarkably consistent,  at least during my lifetime. According to the surveys, once we get beyond fixed salary, about 70% of sales comp plans base incentives on sales volume. In other words, based on [sales] volume regardless of the profit margin of that sale or the cost to serve that customer.

When you have an incentive system like that, either the implicit or explicit message to the sales force is that any customer is a good customer. The message is a variation on the old biblical aphorism, “Go forth and multiply.” That’s what [sales] people do. They go forth, and they bring back a diverse set of customers that have very, very different implications for product, for the selling cycle, for post-sale service, for capacity utilization and operations, for the cash flow profile of the company.

All of this flows ultimately in any business from what sales people sell at what price and how fast. At some point, it really doesn’t matter what senior executives think their strategy is. The de facto strategy of the company is those aggregate sales that are coming in. Conversely, those executives should continually ask, Why do we pay people the way we do and do we understand the daily behavioral implications of our comp system?

Conclusion

Again, companies spend massively more on Sales than Marketing and, as Mark Twain once said, “If you put a lot of eggs in one basket, then keep your eyes on that basket!” The most pressing things executives need to talk about for [aligning] business strategy with daily sales efforts are those questions I mentioned earlier and, in most firms, there are huge areas for improvement in all of those topics.

You might also like:

HBR: Any Value Proposition Hinges on the Answer to One Question

HBR: Putting Sales at the Center of Strategy

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How to Develop a Winning Value Proposition (Infographic)

First off, make sure you know what your customers want.

4 Perspectives That Should Shape Your View of Value Propositions

If you think a value proposition is just a catchy phrase or the elevator speech your salesmen can spout off to customers, consider what Michael Lanning, the creator of the term, has to say.

“It should drive what you communicate, but more,” he explained. “It should be the heart of your business strategy — an articulation of how customers will be better off if they do what your business proposes.”

Three decades ago, Michael invented the concept and coined the phrase while he was a consultant for McKinsey & Company. I recently had the privilege of speaking with him about how this term should be applied in the B2B context. (For an overview of what every value proposition should include, go to my MarketingExperiments blog: Direct from the Source: What a value proposition is, what it isn’t, and the 5 questions it must answer.”)

Here’s a summary of what Michael revealed:

 

1. A real value proposition defines the purpose of your business model.

Value proposition is  a strategic choice — agreed to by all business functions — that details:

  • Who your target customers are, what you want them to do in what timeframe and the competing alternatives.
  • As a result, what specific, measurable experiences these customers will get, including price. How do these experiences compare to the alternatives? This includes both superior and inferior experiences.
  • How your business improves your customers’ business more than competing alternatives.

“Your business should then be completely integrated around delivering that value proposition. Every business function should agree on it, then be controlled and driven by it,” Michael said.

However, what typically happens in practice is that value propositions are developed too late to serve this purpose.

“People decide what product they want to make, how they want to make it and where and how they want to sell it. Then they write a value proposition to dress it up,” he said. “They should carefully choose a superior value proposition, then design and improve their products, services and other functions to deliberately deliver and communicate that superior value proposition. Don’t write a value proposition to help sell your product; create a product and communications to help deliver it. ”

 

2. Insights into better value propositions come from studying your customer.

To take a fresh approach, Michael advises to stop staring at lists of competitive features or what customers say they want and, instead, climb into their life and business. In essence, become them:

  • Identify and deeply understand what’s happening in their business right now and what’s imperfect about it for them. Understand what they are trying to accomplish and where they fall short.
  • Think about how your products and your competitors’ products help or hinder them.
  • Imagine an improved scenario in which they derive a much better set of experiences than they get today from you or your competitors.
  • That improved scenario is the basis for a winning value proposition. Ask yourself, “If we make that scenario happen for the customer, will they see it as a superior solution?”

“Seriously try to think like the customer. Get as close as you can to their current behavior and experiences,” Michael said. “Understand what’s happening. Define how ‘better’ would look to them — better than their current experiences, better than they could get from competitors — and then analyze how close you can get to making that happen, profitably.

“This perspective is different from trying to sell the products you enjoy making or dutifully making what customers tell you to make. It’s about creatively discovering and then profitably bringing about the outcomes they would value most,” he said.

 

3. A B2B value proposition isn’t a once-and-done deal. Consider the entire customer chain.

According to Michael, B2B businesses shouldn’t deliver a single value proposition to all of the customers your product touches or treat them as equally important. Customers at different levels of the chain have different agendas and priorities, sometimes in conflict with each other. Customers at some levels will be more crucial to the success of the business.

“With B2B, you have to deliver value and influence behavior across that whole, long, complex chain,” he explained.

The chain may begin with the immediate customer, who incorporates your product into their product that is sold to a distributor, who in turn, sells it to a final user.

“You need to think about what value needs to be delivered across the spectrum of businesses, and perhaps, ultimately consumers, that your business and its products touch,” he explains.

Then, you need to prioritize these value propositions.

“Think about where in that chain it’s most crucial for a superior value proposition to be delivered,” he advised. “With a long B2B chain, the answer isn’t obvious. It often is not the one you deliver to immediate customers, even though they literally write the check. All value propositions you deliver across the chain must support and complement the most crucial one.”

 

4. A value proposition is not your whole strategy — just the driving vision for it.

Your strategy comprises your value propositions and how you will profitably deliver them. That strategy should include every nuance of how your business interacts with and benefits customers across your chain. It should inform how you:

  • Provide the value proposition, such as products, services, operations, distribution and partnering
  • Communicate it, such as through sales, advertising and packaging

Everyone in your business, and sometimes your partners as well, must understand and buy into this vision and how you will make it happen.

Through this strategic, customer-focused approach, your value propositions will still inform and determine what you communicate to customers. But they will be much more — they will form the heart of your winning, profitable business strategy.

 

You can follow Brian Carroll, Executive Director, Revenue Optimization, MECLABS Institute, on Twitter @brianjcarroll.

 

You might also like

Direct from the Source: What a value proposition is, what it isn’t and the 5 questions it must answer [More from the blogs]

Michael J. Lanning’s Academic Lecture Series [From MECLABS.com]

Powerful Value Propositions [MarketingExperiments resource]

Value Proposition: 4 questions every marketer should ask about value prop [More from the blogs]

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