As noted in a recent Gartner study, the CMO’s budget as a percent of total company revenues has dropped after years of persistent growth. The study concludes: “Marketing leaders must justify past budget commitments and demonstrate the returns they deliver to ensure the future fiscal health of marketing.”
CMOs have been experiencing increasing pressure to provide more tangible evidence that their expenditures drive incremental revenues. While marketing budget requests are often accompanied by financial justifications, the underlying assumptions can be very difficult to verify.
To make matters worse, concerns with marketing-generated leads abound. Salespeople complain these leads represent the wrong types of customers, are hard to convert, take too long to convert, or take too much effort to convert.
In many cases, sales complaints about leads are well founded. A recent Salesforce analysis found that, on average, 13% of leads convert to opportunities and only 6% of opportunities convert to deals. The challenge is to enhance pipeline marketing to such a degree that marketing generated leads target the best customers, convert at a higher rate and with shorter cycles, becoming as precious as gold. All of this is possible when pipeline marketing is supported by a full complement of CRM tools. The latest CRM 3.0 systems can greatly improve pipeline marketing and establish concrete connections between marketing generated leads and incremental sales.
Pipeline Marketing Flow
Marketers have used the pipeline or the funnel concept to track lead development for decades. The “jobs to be done” in the first phase of pipeline marketing are to define the target market, generate lead “suspects” in the target market, develop suspects into “prospects,” qualify them, and transfer them to sales. These steps are reflected in the first four steps of pipeline marketing lead flow.
From Scattergun to Digital Targeting
The early days of pipeline marketing focused on lead generation. The basic value proposition was to improve field sales force productivity by reducing time spent making cold calls. Companies could purchase mailing and email lists, distribute content through waves of mail and email, and solicit leads at much lower costs and at much higher volumes than was possible through a field sales organization.
At first, marketing leads were greatly appreciated by field sales because they could focus on calling on customers who indicated interest. Salespeople could skip the inefficient process of skimming through telephone books and industry association lists or trying to finesse their way through corporate gatekeepers such as receptionists and secretaries to make cold calls on unknown prospects.
Sales and marketing groups started to realize, however, that marketing leads based on purchased lists often had low conversion rates. This led to widespread concern about the overall return on scattergun lead generation techniques. The dissatisfaction with list-based leads contributed to the rapid growth of digital advertising, where advertisers pay per click (PPC), and clicks are generated in more specific target markets.
The Buyer’s Journey
Now marketers embrace the buyer’s journey concept. They realize the need to track and enhance the buyer’s experience all the way through to close and ultimately customer advocacy. The marketer’s job is not done when a marketing qualified lead (MQL) is transferred to the sales group. It is critical to provide sales with tools to help them develop and convert MQLs into customers, and then support the process of developing customers into company advocates. True success comes when you take a full customer journey view and align marketing and sales metrics and processes through the entire pipeline.
Account-Based and Personalized Marketing
Database marketers have been practicing account-based marketing (ABM) for years. They do this by leveraging customer data to model top-, middle- and lower-decile customer groups. This helps them prioritize and focus their marketing efforts to deliver a tailored experience based upon their unique needs.
The new tools available today now help marketers set the right amount of personalization and automation for each customer tier by using (1) automatized data enrichment, (2) machine learning-enabled scoring and (3) connected marketing channels powered by Marketing Automation Platforms. Now marketers can better engage dark funnel browsers. They can understand and engage these shoppers in a personal and tailored manner and convert them into buyers.
Once the full customer journey is mapped, a company must then move beyond the traditional marketing and sales silos and think about the full customer experience, not just about lead volume. Pipeline marketing looks across the full account lifetime and delivers a focused and tailored experience throughout.
The Impact of CRM
It is often observed that technology changes how we do business. Over the last several decades, this has been especially true with marketing. The marketing pipeline concept has experienced three major stages of maturity due to the evolution of customer relationship management (CRM) technology. The table summarizes how shifts in CRM capability and sophistication have impacted or enabled the maturity of pipeline marketing.
The emergence of CRM 3.0 has initiated a major shift in pipeline marketing. The science of generating ever higher lead generation returns has been slowed by a number of factors. First, PPC rates have increased tremendously over the years. Second, a PPC duopoly has formed, where the lion’s share of the PPC market is controlled by Google and Facebook.
Third, and most important, technology now makes it possible for marketers to fully support ABM across the pipeline. They can personalize their marketing efforts and deliver them in the moments that are most relevant to the customer. Indeed, customers increasingly expect tailored and relevant marketing efforts, and respond more favorably to marketing messages and content that correspond with their journey and persona in a given point in time.
From a strategic perspective, companies now differentiate themselves and create competitive advantage with pipeline marketing. They strive to excel through each pipeline stage in ways that deliver a superior customer experience. Here are five principles that embody ways to differentiate your pipeline marketing efforts from the competition:
- Focus initial marketing pipeline efforts on customers with a high likelihood of fit with the company’s offering, rather than simply focus on customers the company would like to have. Taking personalized and ABM approaches energizes and focuses your demand and lead generation efforts.
- Rather than “push” products and solutions with scattergun messaging, focus instead on detecting interest, by listening to their data cues to understand exactly what the customer needs in their journey in a given moment.
- Detect different levels of engagement in the buyer’s journey, as well as the number and quality of buying signals being sent by the customer.
- Differentiate among suspects, prospects and fully qualified marketing leads with refined scoring algorithms. Machine learning frameworks can accelerate scoring and inform marketing messages, content and offers that best correspond with the customer’s journey and persona in the moment.
- Emphasize lead quality over quantity. Break free from the days of focusing on how many leads you generate. WHO CARES!?! Focus instead on close rates of accounts with high lifetime value. Drive profitable share of wallet. Refine targeting and scoring models to manage velocity of leads passed to the sales force that ultimately deliver high close rates and high lifetime value.
Companies now compete on how quickly they transition from CRM 1.0 to 3.0. The first step for marketers is to make the conceptual leap from driving lead volume to collaborating in maximizing pipeline quality and quantity all the way through to advocacy. From there, the challenge is to harness technology so that you simulate live conversation through all of your digital interactions.