Outcome Marketing – Know Your Customers

Michele Hudnall September 13, 2018 0 Marketing, Sales Alignment, Strategy

S Y N O P S I S

Early marketing was consumer product driven and focused on brand and advertising. This would change during the first generation of technology that would take us through big mainframe hardware processing of financial, insurance, government and back-office functions. Packaged software, the internet and the Dot Com boom fueled the second generation of the technology market where products sold themselves.

Social, influencer marketing, technology as a utility and the desire to be attain intangible assets – knowledge, solutions, outcomes – fueled the third generation and this is where the product focused revenue engine fails. The revenue engine has stalled and organizations are seeking growth, how will they achieve it? Growth will require sales and marketing teams changing the conversation from a low cost expense to a low cost investment driving impactful outcomes. Customers are seeking partners to deliver solutions exploring “What’s Possible” to drive the same low cost investment outcomes for their organizations too.

Nothing is IMPOSSIBLE,
the word itself says
‘I’M POSSIBLE’
– Audrey Hepburn

MARKETERS SHOULD ADOPT A CONSULTANT MENTALITY

Marketing is my passion, even though it is not where I started, where I started is what drove a unique quality and success as a Marketer. I entered the technology market and trained in the EDS bootcamp of the mid 1980’s, focused on outsourced services in the insurance industry, specifically Medicare and Medicaid. These are Federal programs with State driven tweeks, but largely the same system. Blue Cross / Blue Shield was the typical provider of the service to the government and EDS was the service provider managing the hardware, software and processing. IBM was selling big iron and giving away applications to the insurance industry to sell the hardware (ALIS – Advanced Life Insurance System) and I would come to maintain one of these systems later. It would be a FREE and 20-year-old system in 1990. An organization that was change averse and did not invest to grow, not uncommon at the time.

Centralized computing, little to no competition and no need for marketing. The early days of technology was an engineering geek-fest and product (mostly hardware) driven – who could process how many transactions at the fastest rate of speed. Life is quite good. Then we enter the 1990’s with distributed infrastructures, custom built client server applications and the need for better control over the sprawling infrastructure. Packaged B2B software was entering the market and we were no longer in a hardware and services market, marketing begins to grow.

The remainder of this post will discuss the market drivers that influence Customer behavior in the B2B technology market, how it has evolved and where we heading. I know what you are thinking, why are we walking through the past – we cannot change the past? That is my usual response when I prepare to read or listen to content that goes back in time. There are concrete examples and key indicators that were missed and the results of those actions are lessons of how and why change is required, must be embraced and the focus pivoted from the Market and Product and put squarely on the Customer and the Outcomes they desire to meet our goals.

There are are 2 significant game changers that occurred and are highlighted with the second still relevant as we are in the midst of it today:

CRM and Cloud based applications – even as the Dot Com era busts
Technology becomes a cloud based utility – commoditized

OPERATIONAL EFFICIENCY – 1ST GENERATION
1990 – 1998

The complex sale had arrived and a sales methodology surfaces in 1985 with, Strategic Selling by Robert B. Miller and Stephan E. Heiman. The methodology was first adopted by non-technology with IBM and HP being some of the first to adopt and develop their professional sales teams. It was a methodology focused on developing an outside in approach with the customer and develop a long-term relationship – the key here is customer focus, not market or product focused. These early sales professionals were driving relationships and outcomes with their customers because let’s face it, there was not a huge B2B software market – YET!

I mention this methodology and book and ask marketers:

How many marketers are reading and training in the same
sales methodologies as the sellers you support?

So why is this relevant, we aren’t the sellers. The “And” needs to come out of Sales and Marketing and evolve into a single organization that fuels the revenue engine with many supporting fuctions, but all of the functions operate with a common set of goals. This single organization will grow to be an asset that drives the organization versus the expense both groups are seen as today and to do this the alignment to common goals, strategy and supporting tactics must be realized.

Take Aways from this Period:

Key factors marketers must practice:

Be on the same page as the selling team – same goals, know the methodology, know the strategy
Marketing has three distinct hats to wear:
- Support the sellers for growth (new customers or customer expansion)
- Nurture current customers to foster influencers, advocates and attain the outcome stories
- Drive market awareness via brand, analysts, press

Each of the functions are important and balancing the right mix of attention is how you build your marketing strategy. Two disconnects have occurred and continued over the course of the maturation of B2B Sales and Marketing: 1) Too much focus on one area, usually driven by the bias of the strengths of the team and 2) Misaligned goals from the selling team.

BRING ON THE 90s – B2B SOFTWARE – CONSUMER DRIVEN DEMAND

B2B packaged applications arrive products are selling themselves with growing competition and one upping each other feature by feature as products are built. The internet has arrived and the ability to get data about products to the market and customers becomes a unidirectional task, web based and product focused. Marketers are documenting product features as benefits and differentiation becomes harder and harder to communicate as the number of suppliers grows. This becomes known as the, Red Ocean in the book titled, Blue Ocean Strategy This book calls out the need to continuously focus on the changing customer requirements and open opportunities to expand and update your position in the market to stay ahead of the “me too”, no differentiation product market.

By 1995 50% of homes would own a personal computer, email was here, and this would drive the packaged software market. This is relevant to marketing because the consumer market continues to drive B2B buying behavior today, 25 years later and marketers still have not taken notice to the trend. This is the initialization of Influencer Marketing. Consumers are connected, can share information and can surf the web to research before they make a purchase or enter the retail organization. The same behavior begins to slip into how these same customers in a B2B buying situation will operate.

During the mid to late 1990’s B2B technology marketing remained largely a brand, awareness and events role and driving product information. This was the height of The Party, as I call it, and I had joined the party with my first IT Management start-up. These early applications targeted IT and ERP functions, creating efficiency for the business and managing the new infrastructure. The focus of these applications was a pure play cost reduction, efficiency and productivity driver, they were not attached to driving the growth side of a business. This will prove to be a misstep in positioning, messaging and selling. Yes, lots of money was made and software was sold, but the ocean would run red soon enough as competitors surged the market and messages could not differentiate products in the market.

About this time, 1996, the market breaks and an emerging Customer Relationship Management (CRM) market is born and will later become the fastest growing market (made up of CRM, Marketing Automation and Sales Acceleration). Why? Because it is attached to the Business Growth side of the buyer and not a now commodity, productivity or worse yet IT tool. As the software market grew, so did the complexity of the sale and as a consultant I would be handed the Strategic Selling book by the sales leader I would come to support. You see, speaking the customer language and working to deliver outcomes to their initiatives was second nature to me – I had been one of them just 3 short years prior.

This is also the beginning of Sales and Marketing friction. Products were not selling themselves and sellers needed to up their skills to learn to speak to the customer, understand their initiatives, how could the sellers product be applied to the initiative to create a solution, what would the outcomes be and how would the customer measure success. This is when positioning and messaging becomes relevant, but there isn’t a marketing organization equipped to address the requirement. I was still a consultant, not a marketer, being asked for the first time in my career (there would be several other times this very scenario would occur again with sellers) to step up and start defining what would be come Product Marketing. I now believe that moniker was a misstep, as many would focus on the product and not the customer.

Take Aways from this Period:

I did not realize it at the time, but this gift and work with this selling team would alter my future marketing career and adds a few more factors to the list of marketing must do’s:

Define your market – Keep it up to date
Know your competition – Keep it up to date
Most importantly – Know your Customer – know them inside out, what drives their business, how do they buy, what are their initiatives, points of pain – Keep it up to date
Model your audience – Map messages to your audience – Match go-to-customer strategy with your messengers (sellers and their sales strategy)

During this period, in lieu of a Product Marketing role, sellers were deriving their own position and messaging. This is inefficient across the selling organization and causes market confusion with mixed signals coming from marketing and each individual that the customer encounters.

CUSTOMER OUTCOMES – BUSINESS OUTCOMES

The teams that practiced customer consulting, speaking their language and delivering their outcomes as a partner were wildly successful. I used to call those trips, ”collecting blank checks”. You see my job as the consultant was to learn enough about their initiative to develop the start of a plan with the customer and have them feel comfortable with the partnership and that we were in this together to get them to sign the order for the software and services to deliver their defined outcome.

Our best compliment came from our first test customer who was also a name brand customer who had already experienced a failed implementation with another supplier. She said quite simply, “they delivered exactly what they said – on-time and on-budget”. We were under a difficult time constraint with this one due to the failed implementation and an impending system freeze as they entered their busy season. The team came to trust our team and comfortable with the change management processes so that we were able to continue improving the deployment during the busy season.

By 1997 the start-up had almost tripled in revenue, the services organization had grown by about 8X with 30% margins and the company was acquired for 10X revenue. We had achieved our desired outcome by tending to the outcomes of our customers and enabling them to be successful so that we too were successful in 3 short years.

The easiest way I describe this to people is it is like weight loss. Focus on the fuel you need to achieve your health and fitness goals and weight takes care of itself. When you focus on the weight, most fail. Those who focus on product or inside out outcomes, fail versus those that focus outside in and their customer’s outcomes.

PRODUCT MANAGEMENT – PRODUCT MARKETING?

During this same time frame, the role of Product Management was emerging. In 1993, Pragmatic Marketing began training using their framework to research markets, create product strategy and go-to-market plans for products. The framework remains similar today (15 years later) as it did at its inception – how to take a product to market. At the time, this brought a bit of order to the chaos of a B2B organization that was engineering driven.

In 1997, I would be tapped to leave consulting and lead our first cross functional, cross geography and multi-product family IT Management product team at the advent of Product Management and the rise of the CRM market. Given my background, I would balance the views of the Prospects (soon to be customers), the Market, Customers, Partners and Internal Customers. After all, I was reminded daily of the $14M invested in the product family by the internal services organization. The Development Director (who recruited me) would come to call me “the gate keeper” keeping the product focused on the customer, while also listening to the service organization. I continued to practice the philosophy that if we delivered the outcomes our customers sought, revenue would follow.

I was executing the initial Product Marketing role with a customer outcome focus at a time when Product Marketing did not exist, and most remained product focused with Product Management taking products to market. The downside to this experience is that this is a product focused on reducing cost and increasing productivity in IT and not business focused as the CRM products were and the market was saturated with suppliers. The business was beginning to control the spending and it was growing increasingly more difficult for IT to receive funding for IT and technology initiatives that were not attached to business initiatives.

The light bulb comes on, Blue Ocean, stop thinking like IT and the IT Influencer in the equation, the positioning becomes:

How does this product drive the business and what are the measurable outcomes?

Take Aways from this Period:

Do not allow yourself to be defined by your Market
Know the Buyer and the Outcomes they seek
Apply an Outside In lens to your message and strategy

This pivot will feel truly uncomfortable to the entire organization, including the sellers even though they have been feeling the pain. Everyone is change averse to some degree and we had just spent more than a decade speaking about products and selling products, this shift to figure out who our customer is, speak their language and discover outcomes that are meaningful to them wiill be truly uncomfortable. Few were willing to try for fear of failure and lack of comfort with the conversation – what doesn’t make sense is that they were already failing. This is not a change I could push through on my own – it would require sponsorship, a test case, prototype and a win to inspire the rest to want to, “Be Like Mikey!” and then capture what worked, didn’t work and figure out how to scale it.

The problem and challenge is universal, it not just a given sales or marketing team or individuals – it’s across the board in all organizations. Sales and market are by design set up to fail by:

Going-to-Market when markets aren’t buyers
Pitching products when customers are buying outcomes, not products
Sales is measured on Revenue (Bookings) and Marketing is measured on numbers of Leads
And here’s the really hard one to grasp:
- Technology budgets are only 5 -10% of an organizations overall revenue and half of it is payroll – considered a cost, just an expense
- Marketing budgets are similar, 5 – 10% of an organizations overall revenue, half is payroll – a cost, just an expense

By design, sales and marketing are not expected to be impactful, UNLESS, the conversation changes to driving outcomes and an asset to the organization. The same goes for technology customers, change the conversation to drive impactful outcomes with low cost expenditures and turn the expenditure into an impactful investment of outcomes.

CRM AND OPERATIONAL EFFECTIVENESS – 2ND GENERATION
1998 – 2010

1998 would bring the first Marketing Automation supplier to market, Aprimo, followed closely by Salesforce.com and Eloqua. They would also hit the scene near the height of the Dot Com revolution and soon to be bust. This is also the start of Cloud based applications. The IT side of the equation is commoditizing, again, take notice, the buyer is the Business and the Outcomes that will drive their business. However, Salesforce.com would survive and grow to dominate the next market fracture, Sales Acceleration.

Salesforce.com and ServiceNow are both platforms and fostered a partner community to develop and attach to the platform that would create unique stickiness inside of their customers. They were not hindered by legacy, on-premise license models that was slowing the traditional suppliers who were trying to make the leap to subscription based services. Another example of Blue Ocean, the market shifted and now two gorilla’s emerge (both are billion – multi billion – dollar organizations).

I was fortunate enough to have worked for and been mentored by both Aprimo co-founders, William Godfrey and Robert McLaughlin. You see, Bill handed me that first copy of Strategic Selling as I worked with his sales team prior to the acquisition in 1997 and Rob would be my manager as I took on that first Product Management leadership role. As the initial Marketing Automation technology in the CRM market, it would eventually sell in 2011 to Teredata for $525M and 2011 begins the high growth period for Marketing Automation …. let me not get ahead of myself yet.

BI-DIRECTIONAL COMMUNICATION AND RISE OF PERSONAL DEVICES

The B2B technology market suffers a blow, The Party is over and the strong survive and continue to press forward. Email and Marketing automation enable Marketers to communicate more freely. Marketing drives outbound, pushing messages, invites, product information, etc. out to the masses and websites tout the latest greatest product features to drive more leads.

Palm Pilots, Blackberry’s and iPods arrive un-tethering us from our desktops / laptops. Google and Wikipedia arrive serving up the answer to any question we dish up and Blogger gives the rest of the world, consumers, the ability to have a web page and a voice in the market too. Remember I mentioned that pesky consumer market driving B2B behavior, here it is again. Infrastructure and applications are in the Cloud, not on premise and consumers are becoming influencers.

B2B Product Marketing is focused on automating outbound communication at a time when the consumer is going mobile, taking content with them, creating content, searching for their own answers and starting to have a voice in the market. This is the start of Digital Marketing and the rise of Field Marketing – the execution arm of marketing pushing product content to the masses. Email soon becomes SPAM, filtered and deleted.

The customer outcome focus, consulting and messages have been consumed by automated execution of mass quantities of product information and mismatched goals between sales and marketing. Marketing is measured on producing leads and Sales is measured in bookings and revenue. Leads do not equal revenue and revenue does not equal profit. Automation begins to be a way to contain cost to get to profit and mass quantities of leads – no one said there had to be quality. Sales and marketing is a cost, not a way to drive low cost investment into delivering outcomes.

SOCIAL EXPLOSION AND HBR SAYS “IT DOESN’T MATTER”

Personal and professional communities arrive and explode, content tracking collects our news and twitter amplifies the noise. Now customers are starving for “Knowledge and Insight” and solutions. What customers receive is stale product content on blogs and amplified via Twitter. The era of “Content is King” has arrived and Marketing’s response is a Content Marketing role to act as project manager to push content out – outbound continues to reign.

Does anyone now know who their customer really is?
Does anyone know what outcomes their customer is trying to achieve?

This would be about the time I would “go back to work” as I called it. You see, between 2000 – 2005 I became an Industry Analyst and studied the market, continued speaking with customers and felt their desire for a consultative partnership with suppliers and their pain in what they received. I watched the buyer shift from IT to the business.

How does Marketing miss this golden opportunity, perfect storm to
publish content in self built communities to share, connect, amplify, target and engage?

Straddling each side of 2010, both Google Apps and Office 365 enter pushing productivity applications to the cloud too. This was a tad slow in adoption due to security concerns, but it didn’t take long for organizations to decide to stop managing installation of workstation software, patches and licenses. The business is driving technology costs out of the organization for IT, IT is a cost, a commodity utility and not driving outcomes.

Back office hardware and software has just become a commoditized utility and the focus is turning to solving business initiatives with technology being a utility enabler, nothing more than a necessary cost to the initiative – can you say, Back to the Future! This is exactly where we began with HP, IBM and EDS developing and delivering services and outcomes with technology as early service providers.

The question has changed, help me discover “What’s Possible?”
Partner with us to define the solutions for our initiatives to drive the outcomes that will drive our business!

INFLUENCER MARKETING HAS A PLATFORM AND COMMUNITIES

Now add insult to injury, B2B Sales and Marketing has focused on the IT Influencer at a time when the business is calling the shots. Marketing has put focus on developing many messages for buyer personas when there is only one buyer with many influencers. The Buyer is the business, focused on outcomes and IT is an Influencer checking the boxes on the technology fit for maintenance at a time when most of the infrastructure is moving to the Cloud.

Influencer Marketing is primed and fueled with the vehicles by which to create communities, share, communicate and engage with the social explosion. However, did Marketing organizations develop and nurture advocates and influencers to take advantage of these self-defined communities? The answer is no. Marketing focused on outbound social communications, not engagement.

Most do not know the outcomes their customers have experienced with their products and worse yet, even what customers use the products to do most regularly – even with the product focus that has sustained for so long.

LinkedIN is the most interesting of the social movement. They have taken a much more holistic approach and suppliers should have taken notice and taken advantage of it:

2002 – LinkedIN arrives
2010 – LinkedIN adds Pulse – tailored and aggregated news by user
2014 – LinkedIN adds User Publication capability

Why do I as a Marketer find this interesting?

LinkedIN owns the network of communities, the news they read and interact with and the platform that enables contribution, engagement and amplification. It is self-governed from too much SPAM, who wants to look like a jerk in front of their professional peers and future opportunities.

As a subscription, individuals receive premium insights to the employment market and Sales professionals are targeting and connecting to their prospects. Sales is now individually defining their customers and messages and inconsistently across the organization at a time when customers are seeking a partner to help them with solutions that deliver the outcomes their business is driving. It is the platform to Influence the market and customers via a self made network of communities.

Where is Marketing? Why isn’t Marketing defining the customer, understanding the general initiatives of customers and driving the messages to work with Sales to target, personalize and engage, enabling Sales to focus on the execution and navigation of the “agreement network”? Don’t worry, this is a universal challenge across sales and marketing organizations.

INTANGIBLE ASSETS – SOLUTIONS, KNOWLEDGE, OUTCOMES – 3RD GENERATION
2010 – PRESENT DAY

From 2011 to Present day, customers have turned technology for B2B suppliers into a utility. The devices and software that power IT and the back office most suppliers have focused on for two decades hold no value and are treated as a transactional sale from the lowest cost provider, it’s a rounding error as a cost in the budget. Not the place most B2B suppliers want to be.

During this same period, MarTech and SalesTech are both the fastest growing markets. They are in the CRM Market, however, Marketing Automation and Sales Acceleration have broken free of the CRM moniker.

2011 – 2018 MarTech has grown from 150 – 6829 suppliers with a market of ~$35B in revenue
2017 – 2018 SalesTech has grown from 720 – 830 suppliers … wait for it … at ~$28.2B in revenue
Salesforce.com makes up ~$11.2B or 45% of the SalesTech market revenue
I speculate the largest portion of the remaining 55% of SalesTech is made up of Salesforce.com add-ons

On the surface based upon suppliers, SalesTech appears to pale in comparison to MarTech. From a revenue standpoint and a single supplier, SalesTech and Salesforce.com are the clear gorilla’s in the room. It is also estimated that only 50% of Marketing departments have made MarTech investments, WHAT? Why are these markets growing so fast? Is it merely spending on automation to power a revenue engine as a quick fix? Is it an indicator that growth is a challenge for the organization and it’s an easy way to measure something?

Just because you can measure everything doesn’t mean you should.
– W. Edward Deming

I look at these numbers in conjunction to where Sales and Marketing are failing their organizations and their customer’s and I see gross spending to drive out cost and drive up automation execution to drive numbers of things – LEADS – outbound and product focused. A cost, not an investment to drive an outcome.

Leads do not equal Revenue and Revenue does not equal Profit

Sales, Marketing and Services must become a team sport focused on Going-to-Customer (not market), Customer Outcomes and navigation of the Agreement Network as one team with common goals. End mismatched goals and inefficient and ineffective execution of automation.

LET’S WRAP THIS UP

The answer is right in front of organizations – stop driving your Sales and Marketing departments down a path that is easy to measure, but fails to deliver results. Outcome Marketing, Customer Engagement and integration with the Sales Strategy is the path to driving impactful outcomes as an investment, rather than a cost. It will be hard. Research, Modeling, Mapping and Matching will all be required. Integration across functions and a change in mindset as an investment to deliver outcomes, not a cost, both internally and for the customers you work with. There are no short cuts to achieving the results the organization desires and have stalled.

From 2005 to 2015 the customer market pivoted turning technology into a utility, while also gaining a voice in the market to influence each other. B2B suppliers did not take notice to the utility shift and did not take advantage of the social platforms to have the same insightful voice to drive inbound results.

B2B suppliers are behind and will be way behind the next wave, AI, Analytics and automated decision making. Today, suppliers cannot answer basic questions regarding:

Who is the customer?
What do they buy?
Why do they buy?
What do they use?
What do they achieve?
How do you change the conversation from a low cost expense into a low cost investment with high impact outcomes?

Current systems are not supplying basic demographic and psychographic indicators that will drive segmentation, targeting and personalized messaging, not to mention, nurturing advocates and influencers. Current data will not support initiatives that could take advantage of AI or advanced analytics.

TAKE AWAYS

Outcome Marketing has only ever existed in very small pockets where consultants who were once buyers / influencers entered the ranks of Marketing, prototyped with small teams and never scaled the organization. A customer focused, outside in approach to Modeling Audience (Customers) – Mapping Messages – Matching Messengers (Sellers and Mediums) to help them take a low cost expense and turn it into a low cost investment driving impactful outcomes is what customers are seeking.

The adoption of Outcome Marketing will force:

Data clean-up
Insightful content
Buyer messages
Influencer content and nurturing
Support of the seller’s quest to navigate the agreement network within the buyer
Drive to nurture advocates and influencers

When the focus is shifted to driving customer outcomes, rewards to drive the outcomes of the supplier organization will be realized too. Future posts will break the topic down and cover the aspects of being an Outcome Marketing organization.

* * * * *

Now I ask you: Are you ready to fuel your revenue engine with an Outcome driven Sales and Marketing team and turn a cost into an impactful investment?

Share your comments below or connect with me!

Michele Hudnall