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Market Segmentation: A Critical Ingredient of B2B Marketing

Market Segmentation
Market Segmentation

When it comes to factors that accelerate growth in a B2B business, one of the most powerful is having well-defined market segmentation.

Big consumer brands have known this for decades and have the process down to a science. They know their target audiences inside and out, and how to position their products for optimal success in any given market. By combining precise geographic, demographic, behavioral, and psychographic data, they understand who will buy their products, where, how, and why. With some focus and energy, you can too!

Many B2B companies don’t pay enough attention to this critical aspect of marketing. Some rely on intuition or "gut feel," which leads to missed opportunities and inefficiency.

Everything in sales and marketing revolves around increasing the probability of closing more deals in less time. Accurate segmentation has a dramatic impact because the more relevant you are to prospects – the better your chances of engaging with them.

What is Market Segmentation?

Investopia defines market segmentation as “the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Market segmentation enables companies to target different categories of prospects who perceive the value of your products and services differently from one another.

Generally, three criteria can be used to identify different market segments: 1) Homogeneity – common needs within a segment; 2) Distinction – unique from other groups; and 3) Reaction – similar responses to your marketing.”

It’s all about clearly defining your target audiences and then communicating in ways that will persuade them to consider your products or services.

Why is Market Segmentation Critical?

You may have heard the adage that people like to buy, but they hate being sold to. This is slightly paraphrased, but the idea is one we can all relate to. We become bitterly annoyed with marketing when what’s being pushed is not relevant.

Market segmentation is crucial because it helps make sure the people you contact can actually benefit from what you’re selling. Put another way – market segmentation ensures you are talking to the right people about the right things.

The Basic Building Blocks

When doing the research to build your segmentation strategy, the following essential ingredients should be included in your framework. Answering as many of these questions as possible will get you off to a great start.

  • The “Sandbox”
    What markets do you want to serve geographically? This can be local only, specific cities, provinces/states, regions, or countries. You need to make sure that if you plan to expand rapidly, you can provide the levels of sales coverage, delivery, and support required.
  • Addressable Market
    Often one of the toughest questions to answer is, "what is your overall market size by segment?" Fortunately, online government data and other industry research (free or paid) are often available online. Ultimately, you want to know if there is enough potential business accessible to support your sales goals.
  • Account Characteristics
    What industries are they in, and what clients do they serve? What type of organization aligns best with your offering – SMB, Enterprise, Government, Not-For-Profit?  What do these companies look like in terms of annual revenues, employee counts, etc.? How do they operate? 
  • Market Adjacencies
    Are there sub-segments within your target markets? How do you define them? Are there closely related industries in their ecosystems worth pursuing? Are there partners you work with that have access to customers you want to pursue?
  • Buyer Profiles
    Who are the buyers and influencers in the companies you are trying to sell to? What are their roles and titles? What problems could you solve for them? Where do they connect with peers? Where do they get sources of information related to your offerings? More sophisticated marketers will build “personas” as a way of describing the people in target audiences. Always remember - you may be trying to break into new accounts, but you are still selling to human beings!
  • Buying Behaviours
    What processes do they typically use to buy – formal procurement, informal? When do they buy – is it seasonal, based on specific events, or random? This will not be the same for every company you approach, but often there are discernable patterns in specific industries. Government procurement is an excellent example because it's typically rigid and based on a Request-for-Proposal (RFP) purchasing process.

Precise marketing segmentation helps build the foundation needed to develop your market positioning, messaging, and most everything else that follows. It’s also important to think about market segmentation in the context of your product capabilities and the competitive landscape.

Conclusion

Virtually everything in B2B marketing revolves around precisely defining your target audience and their sub-segments. Taking a shotgun approach to the market simply won’t work in the long-run. Investing in market segmentation upfront is guaranteed to improve results, save time, and reduce costs! Like most things, how you define your target market will evolve over time. It's a good idea to review and refresh your segmentation definitions during your strategic marketing planning cycles.

Please share any ideas or thoughts you may have on this topic and contact us if we can assist in any way. To get notified when new articles are published, please hit the button!

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Randy Fougere, President, Think2Grow Marketing
With a passion for building brand awareness and lead generation, I started Think2Grow for B2B clients looking to accelerate growth through better marketing strategy and execution - something I have been doing for more than 30 years now.

A Strategic Marketing Plan Needs 6 Essential Inputs

Strategic Marketing Plan
Strategic Marketing Plan

Creating a marketing plan is not easy. But, building an effective strategic marketing plan is even harder. It’s common for many marketers to think of their quarterly or yearly plan as a mere collection of activities, most of which carry over from previous periods. Many fail to consider the important context needed and only focus on tactics - this is not a strategic approach and seldom leads to great results.

In a recent post called "Marketing Plans – 5 Steps to Better Planning and Execution," we suggested a strategic planning framework to help organize your thoughts. Here we will focus on mapping out some key essential inputs to use when developing a strategic marketing plan. Ideally, this background information forms the underlying guideposts that shape your strategy and directly link to selecting an optimal mix of activities and messaging.

What are Essential Inputs?

At a high level, the essential inputs are a collection of your historical marketing results, what you do, what makes you different, your market segmentation, the competition, and how you are positioned in the marketplace. Regardless of industry, these inputs are quite universal and will be broken down in more detail below. This is not an all-inclusive list, but covers the most important elements.

If you have been in business a while, you likely have most of the essential inputs figured out. However, it’s surprising how many companies don’t have them documented, readily available, and current. If creating a marketing plan for the first time, you really can’t begin without them. It’s a good idea to create a “Marketing Playbook” document, so the information is all in one place. Also, be sure to review and validate them before starting any plan in the future.

#1 Historical Results

  • This first essential input is actually more of a process, and a critical one that is often ignored. Take time to analyze your previous marketing results and metrics to understand what they mean and how you can improve.
  • The help point out gaps in your marketing program, weak messaging, or ineffective call-to-actions. The data may suggest you stop doing things that aren’t working and start doing more of the activities that are having an impact.
  • Having a good handle on where you have been, should also help you think more creatively about marketing ideas you haven't tried that might work well.

#2 Product Definitions

  • To build a strategic marketing plan, you should start with a fresh look at what you sell, which of course is why you’re in business in the first place. Revisit the products and services you want to focus on – are they clearly defined? Have they changed, or improved since your last plan?
  • Make sure the product documents, collateral, and digital content you will use in your campaigns and selling efforts are up-to-date and clearly articulated.
  • Ensure that anything describing your offering promotes positive outcomes and value – not just features. Keep it customer-focused.

#3 Value Proposition

  • ​If you don’t have a formal Value Proposition or Unique Selling Proposition (USP) for your company, create one! If you have one already, pull it out and make sure it’s still relevant.
  • A Value Proposition is basically a definition of what your company does, for whom, and how it’s different - preferably better than alternatives available in your respective markets.
  • Your Value Proposition should always be on your mind when building the key themes and messaging you will use to communicate with your prospects and customers.

#4 Market Segmentation

  • One of the most crucial and fundamental elements of any strategic marketing plan is having a clear understanding of your market as a whole and the well-defined sub-segments within it.
  • Segmentation will vary depending on your industry but for most B2B companies, it makes sense to group target accounts by attributes such as industry, geographic location, company size, key buyers, the buying process, and the problems you help them solve. See our article "Market Segmentation: Starting Point of Effective B2B Marketing."
  • With B2C and Direct-to-Consumer marketing, segmentation is more personal and typically based on geographic, demographic (i.e. age, gender, occupation) psychographic (i.e lifestyle, values, personality) and behavioral factors.
  • When you tightly define your segments, the messages you create will be more relevant, which greatly increases your chances of getting noticed and generating leads.

#5 Competitive Landscape

  • Besides macro factors such as the economy, regulatory constraints, or market saturation, the strongest external force working against you is the competition.
  • You need to know who they are at all times within your segments. You also need to understand their strengths, weaknesses, and how to position against them to win.
  • Make a point of regularly conducting win-loss analyses to learn how you can compete more effectively.

#6 Themes and Messaging

  • With the information gathered and analyzed during the first four inputs, you are now ready to build the distinct themes and messages for the segments you want to pursue.
  • Take time to be creative and get outside help if you need it. Your messaging needs to break through the clutter and be compelling enough to create interest and opportunities.
  • If your company has core values that form important points of your differentiation, be sure to weave those in as well.
  • Use your messaging clearly and consistently throughout your marketing communications.

A Strategic Marketing Plan is Worth the Effort!

If you think this exercise is a lot of work – you are absolutely right. But building a strategic marketing plan and executing it takes, time and energy and comes at a price. When you do your “homework” upfront and have a strong foundation to draw upon, you significantly improve your probability of success!

Please share any ideas or thoughts you may have on this topic and contact us if we can assist in any way. To get notified when new articles are published, please hit the button!

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Randy Fougere, President, Think2Grow Marketing
With a passion for building brand awareness and lead generation, I started Think2Grow for B2B clients looking to accelerate growth through better marketing strategy and execution - something I have been doing for more than 30 years now.

Marketing Plans – 5 Steps to Better Planning and Execution

Marketing Plans Thumb
Marketing Plans

In the famous words of Benjamin Franklin, “By failing to prepare, you are preparing to fail.” Most people understand that proper planning is a crucial ingredient of success, but creating and executing successful marketing plans is a real challenge for most companies. This principle also impacts sales, human resources, operations, and all other major business functions. Although few would argue against the merits of preparation, many companies don't step back and carve out the time needed to do it properly.

Numerous studies show a massive disconnect between their strategic marketing and business plans and the intended results. The statistics range from a dismal 3% to a paltry 33% success rate. Although there are many other specific factors, the following are key reasons why things usually go wrong from the planning perspective:

  • Lack of planning experience or a solid planning process.
  • Not enough research and data used in the decision-making.
  • Not enough detail put into the plan.
  • Unrealistic goals relative to the available resources.
  • Lack of buy-in from those who will execute the plan.
  • A weak or non-existent governance process.

5-Step Marketing Management Framework

To help make your planning more structured and effective – you might benefit from the following framework. The basic premise is that you start at the most strategic level of thinking. Then you continually break things down into more tactical activities. Everything should align closely with your key inputs and business goals. 

Marketing Plans

Building better marketing plans requires some Essential Inputs that form the foundation when selecting your activities and mapping out how you will achieve them. If you don't have these inputs or haven't revisited them lately, some homework should be done first.

Arguably, this is a one-time event, but things often change over a year and sometimes during a quarter. At the very least, it’s wise to re-validate your data and assumptions before the real planning begins

Basic Guidelines for Marketing Plans

#1 Business Goals

These are the goals you are planning to reach during an upcoming period. Marketing examples could include things like the number of leads created, website and social media engagement targets, or brand building metrics. There can also be important large-scale strategic goals, such as deploying a marketing automation tool or hiring for several key roles during a quarter.

During this phase, you also need to estimate the time, cost, and energy it will take to achieve your plan. Make sure the budget and resources are abundant enough to get the work done. Being unrealistic about your goals is a recipe for failure.


#2 Focus Areas

This step defines the major Focus Areas that need attention during the execution period. What are the most important “big buckets” of your plan, and how do they align with your Business Goals? If you look at the examples in the framework, you would be right in assuming that these stay relatively consistent. However, there will be varying degrees of effort put into these Focus Areas at any given time since you can’t do everything at once. Usually, there are 4-6 of these in total.


#3 Major Initiatives

Major Initiatives feed into and support your Focus Areas. For example, if you need to create more brand awareness this year, your Major Initiatives may include things such as SEO and content marketing, social media, digital advertising, public relations, or events.

These can also be more programmatic. Let’s say client retention is an issue for your company and a Focus Area this quarter. In this example, Major Initiatives might include creating programs to improve communications with your customers, such as a newsletter, or a rewards program to help increase loyalty.


#4 Project Plans

Specific project planning is the area where many fall short. There is often a good high-level plan with the right mix of Major Initiatives, but a lack of detailed thinking at the activity and resource levels. By not working through this concisely, it’s easy to underestimate the work needed to execute effectively and on schedule.

When you hear “it took longer than we thought,” – it typically means a lack of detail in the planning phase. Whether it’s MS-Excel, MS-Project, or an online tool such as Teamwork (a personal favorite), the marketing team needs to map out the many moving parts of each Major Initiative to clearly understand who will do what, and when. Contingencies also need to be considered since priorities can change over time.


#5 Execution

To keep your Project Plans on track and running smoothly, you need a good project management process and strong governance. As mentioned earlier, you should employ a tracking tool to measure progress.

You also need regularly scheduled checkpoint meetings. Weekly usually works best while executing a quarterly plan, plus a monthly touchpoint and a longer 1 to 2-day yearly session. I can hear the groaning, but investing in this process is where the rubber meets the road. A steady cadence helps you identify and resolve issues before they side-swipe your projects and allows for mid-stream adjustments.

The final and critical aspect of execution involves measuring results and outcomes, analyzing the data, and making improvements for the upcoming period. This step may also lead you to "stop, do more, or try something different" decisions.

Conclusion

When you use a disciplined approach to create and execute achievable marketing plans that align with your goals, you will get better results! Putting in the time and effort upfront reduces frustration and provides better clarity, resource management, predictability, and desired outcomes. 

Please share any ideas or thoughts you may have on this topic and contact us if we can assist in any way. To get notified when new articles are published, please hit the button!

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Randy Fougere, President, Think2Grow Marketing
With a passion for building brand awareness and lead generation, I started Think2Grow for B2B clients looking to accelerate growth through better marketing strategy and execution - something I have been doing for more than 30 years now.

Align Marketing Goals with Your Business Strategy

ALign Marketing Goals
ALign Marketing Goals

This is the third article in a series that outlines a proven and detailed process to help create and execute better business plans.

Here we’ll focus specifically on marketing. The first section provided an overview of the model. The second described the essential key inputs to use as contextual guideposts. This section will focus on making sure the marketing plan is created in alignment with the overall business strategy. This helps ensure that marketing activities scheduled for a particular period will impact the “big picture” as much as possible.

Why Alignment Matters

Making sure marketing activities align with business goals seems obvious enough. But, overarching strategy and departmental plans for many companies end up getting made independently. A bit of a flaw in the planning process it seems. If your CEO asks the question “so what’s marketing doing this coming quarter?” then this likely describes your situation.

There is an excellent strategic planning and governance program I’ve used in the past called Gazelles. It’s basic premises focus on simplified, top-down strategic planning and corporate alignment. Companies perform best when all the cogs in the machine fit precisely together and operate in concert with each other.

It is critical marketers are involved in the business planning process from the beginning. How can they impact the right things if not? The simple fact is, operating in a vacuum is inefficient and will inhibit growth.

The Timing and Impact

With virtually all companies, an on-going target is to achieve a revenue number in a given period. Along with sales, marketing clearly owns a share of this. But, the reality is that campaigns and initiatives executed this quarter, will likely not create engagement, leads, or opportunities until next quarter, or even later. This “time lag” depends on your “pipeline build” time and sales cycle velocities and it can be quite long in some industries – particularly in B2B segments. Marketing is a cumulative process and dependent on many factors including the prospect’s timing. Therefore, when you align your activity to revenue recognition, you better be sure to explain and account for a reasonably accurate timeline.

A good option here is to make sure a corporate objective is “building a healthy funnel” now to impact revenue later. This is a more rational approach – it better reflects what marketing truly does, and it will help grow revenue in time. Hopefully, you have enough history and analytics to predict when. The second challenge marketers always face is clearly understanding and proving the fruit of its labor. It’s easy to see how many people buy online if you set up a fantastic promotion that’s been well-packaged. But what about longer cycle B2B sales?

Obviously, the sales team plays a direct and easily measured role. But how do you assess and acknowledge marketing’s contribution? Was it an initial impression from a website visit, a slick webinar, a great direct mail piece, valuable social media content, or a brilliant resource developed for sale people to use? It’s often complex, but you need to try and get a handle on how marketing-generated activities impact revenue and how your work creates ROI.

Properly Aligning Marketing Goals

To align marketing goals closer to your company’s high-level business strategy, consider the following tips.

  • Make sure marketing is involved in the operational planning process from the beginning. The first reason is a no-brainer – you can’t align with anything if you’re not in the loop. Also, marketing tends to get involved in communication and other programs across other departments, so you need to know how all these pieces fit together.
  • Put substantial thought into the activities you choose and continually challenge yourself. If they don’t tie into the overarching strategy, should you be doing them at all? Sure, a certain amount of foundational work needs to get done that may not immediately appear to be aligned – but if implementing a new CRM is a must, make sure you can explain how it’s going to help improve marketing effectiveness and bring in new business in the future.
  • Pick meaningful metrics and continually track progress. A CEO ultimately thinks about marketing in terms of how much revenue it helps influence. Make sure your metrics are simple, relevant, and can show results through the evolution of awareness, engagement, qualified opportunities and eventually closed deals. Another important exercise involves “back-tracking.” If you know you have the lag time to deal with (and most marketers do), you better be able to show the ways yours actions influenced buyers when they do sign. This means you must have robust systems and processes in place to look back in time and do the analysis.
  • Account for the time lag. As pointed out earlier, depending on your industry and type of sale, there is a rolling horizon when it comes to marketing impact. The results are not immediate unless they are project-based and achievable in a specific timeframe. So, you need to make it clear to everyone that your impact on sales this quarter started in the past and what you have planned now will take time for the results you project to materialize.
  • Be realistic about what you can deliver. One of the common mistakes made when building a marketing plan is not accounting for the actual capacity available on the team to complete it. If you are being too optimistic about doing the impossible, you set yourself up for failure. It’s important to understand and map out your capacities based on the work required before finalizing your priorities. You need a clear view of the people, budget, time and resources needed to execute and achieve your goals.

Alignment isn’t always a perfect science, and it poses some unique challenges for B2B marketers with long sales cycles. That said, the closer you can align marketing goals to the overall business strategy – the better it will be for you, your department and the company!

Execution Time – At Least 30% is Already Taken

Execution Time
Execution Time

Whether you manage a team in a project-driven environment, or you’re a lone wolf with a big plan, time management is a continual challenge for us all.

As important as it is, many people are oblivious to the hidden time constraints that are part of their average work weeks. It’s easy to do if you don’t give it some thought. If you break out and calculate the time spent on other activities, you may be amazed by how much execution time is simply not there.

Capability, engagement and time capacity are major factors that impact productivity. Let’s say you are about to enter a new quarter and you’ve just finished a marketing plan. How will you succeed in achieving your goals? Obviously, you must have the requisite skills and abilities across your team. You also need enough budget and resources allocated for the plan to work. Let’s assume that you and your people are in a situation where you feel adequately motivated. If not, this is another issue to contend with. That leaves time – perhaps the most important variable of them all. If you haven’t thought enough about how much of time is actually available, chances are, you will not meet your commitments. You also run the risk of sub-par quality as you madly scramble near the end of the quarter. (have you ever been there?)

So how much actual time do you have to work with when executing your plan? The chart below highlights some areas you probably don’t think much about during your initial planning. If you have a role where a prescribed number of deliverables must be completed in a fixed timeframe, those activities represent the pure execution part of your plan. However, as seen below, there are many “foundational” activities that still need doing as part of your day-to-day job.

Execution Time

These added demands on your time are for the most part important. The point is really about making sure you know they exist and have built your plan accordingly. For example, if you have a team reporting into you, you need to spend time with your people, and administrative tasks such as performance appraisals still have to get done. Let’s say the weekly plan updates, status meetings (with your team and boss), revisions and follow-ups take an average of 4 hours a week, that works out to over a full weeks’ worth of time during a quarter. A calculation I’ve done based on experience and typical corporate environments puts the “non-execution time” at a conservative 30%. That’s a big number to ignore!

Execution Time Tips

There are a number of reasons why expectations are misaligned when it comes to planning time. Below are some things to consider when trying to right-size your capacity:

1. Think About It: The math is very simple – how much time you need relative to how much you have. Put some focus on determining how much time is required for the activities you are scheduling. Be as detailed as you can and learn from past experience. Estimate more precisely the actual time you will have available using some of the ideas shown above. Going through an exercise like this will undoubtedly surprise you when it’s all added up.

2. Don’t Underestimate: Even if people do a good job at estimating how much time is available, there can still be a disconnect because they underestimate how long the work will take. This can be a strong inclination for people who are naturally positive and optimistic. While those traits are great ones to have, the rose-colored glasses can cause anxiety when tasks take much longer to complete than planned.

3. Build In Contingencies: It’s impossible to account for everything that can side-swipe you along the way, but try and anticipate obstacles and think through “what if” scenarios. Also, be aware of key dependencies in your plan and make sure they get the attention and priority they deserve.

4. Don’t Get Distracted: As tempting as it can be, don’t go off course chasing “shiny objects.” If your plan is the right one, stick with it. Put ideas in a parking lot for later and push things and people off whenever you can if it takes time away from your execution.

So the next time you start a new planning cycle, think about the hours and days of productive time that are really at your disposal. We’re not even considering the degree of true productivity, because nobody works 100% of every hour they have available. But if you use at least some type of calculation to get a close estimate, it will help you better manage your capacity, which will lead to better execution.

Increasing Sales – The Marketing Metric That Matters!

Increasing Sales
Increasing Sales

​For years, I have heard the debates about where the line should be drawn between sales and marketing. In fairness, marketing is often misunderstood.

Ask 5 senior people in a company what marketing means to them and you’ll likely get 5 different answers. Sure, there are the 5-7 “Ps” of Marketing (depending on when you learned them). Yes, it’s about building segmentation, awareness, engagement and many other core activities. But, these are all a means to an end. That “end” ultimately is abut increasing sales!

We marketers love numbers. With the digital era in full swing, we have become mesmerized by an array of website, SEO, and social media statistics. Of course, the analytics are critical. But, let’s not lose sight of what counts most at the end of the day – leads, opportunities, and closed business. These metrics matter most to your executive. They dictate your budget, how many people you can hire and how your personal performance will be viewed.

​In simple terms, marketing is responsible for all activities that eventually create well-qualified opportunities. Of course, sales then needs to step in to get those deals nurtured and closed. Marketing is usually not tasked to find 100% of all new leads. There is also sales prospecting and account management, but marketing often helps impact these as well. When marketing works, the funnel increases. When you have a good sales team and processes, the win rate increases.

Increasing Sales Comic

​Showing Marketing’s Impact on Increasing Sales

​The Internet has drastically changed the dynamics of traditional sales and marketing functions. Marketing leaders are becoming even more accountable for revenue impact so they must keep their “eyes on the prize” in driving and showing better financial results. Here are a few suggestions that can help:

  • ​Make sure your strategy doesn’t fall into the trap of “activity for activity’s sake.” Think about each part of your plan and keep asking “how will this help build new business and when?” Look at all you do through a lens of results rather than tactics. It doesn’t matter if you lean more towards social media, email marketing, events, or telesales – as long as you stay focused on the end-game. This includes programs that stimulate existing customer growth as well.
  • As part of your planning, make sure you have a handle on the sales pipeline requirements. Also, get to know your conversion rates intimately. Be definitive about the contribution expected from marketing. Define and agree on how many leads and opportunities are realistic based on your resources and historical data. Once you know that, plan using these numbers as guideposts. 
  • Learn the timing of when your initiatives and campaigns will turn into leads. This will depend on many factors including your industry, buying patterns and the average length of your sales cycle. What you plan this quarter, may not impact sales for many quarters to come. Taking this lag-time into account is crucial when presenting your forecasts and results.
  • Be diligent about showing marketing’s impact on revenue. For every new deal your company lands, make sure you figure out how the client found you, how your brand was reinforced and what convinced them to buy. You should know where prospects are coming from, and the role marketing played to attract them. Train sales to get these insights early and document them in CRM. If you have a marketing automation tool, it can do much of the tracking for you, The more information you can have to show your team’s impact on the top-line, the better!
  • Think “Customer Lifetime Value” or CLV. If you don’t know your average CLV – figure it out. There‘s a huge difference between counting a $5,000. initial order compared to $300,000. over the next 2 years. Some would say Marketing’s role ended with the original order because sales and operations carried the ball from there. But I would argue marketing continues to contribute through brand reinforcement, sales enablement, and customer communications, and more importantly, that $300.000 client wouldn’t exist if not for Marketing bringing them in the door.
  • Finally, if you are a marketing leader, re-build your team’s culture to become more concerned about sales results rather than just Twitter impressions or Facebook likes. If your people are on a bonus plan, you may want to consider tying some of the variable compensation to the number of new leads and opportunities created in a given period. This helps sharpen the focus and promotes a tighter alignment with sales.

​Business owners and CEOs I talk with are naturally obsessed with growth, and they have a hard time connecting the dots between that and their marketing investments. With B2B, the sales cycles tend to be longer and more involved, making this even more challenging. Marketers need to realize that increasing sales should always be the prime objective. When they can show how their efforts link to this overarching goal, their value in any organization will take a sharp turn for the better.

Competitive Analysis – The 3 Essential Building Blocks

Competitive Analysis
Competitive Analysis

An area of sales and marketing that often gets overlooked and underserved is developing a comprehensive competitive analysis.

Most times we know who we compete against on a regular basis, but it’s typically high level. The fact is that most companies don’t invest nearly enough time and energy understanding their competition deeply enough. They also neglect to create a process for feedback needed to keep the information current. In a study by the CMO Council, only 9% of companies surveyed had extensively analyzed their competitors. To make things worse, a surprising number of businesses don’t make it a priority to understand how they won or lost deals by doing formal reviews after the fact.

“Know your enemy and know yourself and you can fight a hundred battles without disaster.”  ~ Sun Tzu, The Art of War

Knowing your competition inside and out will help you: learn what others in your industry are doing; what prospects want; and how to position and differentiate your company with more impact. All of which eventually leads to more sales! If this makes so much sense, why don’t companies do enough of it? Why can’t they sustain it once they have started? Great questions and a few simple answers come immediately to mind:

Competitive Profiles

​ 1. They have glossed through the exercise 5 years ago and feel they still have it covered
 2. They don’t make it a priority and it sits on a long to-do list somewhere
 3. There is no ownership or process to keep the information current
 4. They don’t know how to do it well or don’t have a disciplined process to manage it

#1 Competitive Profiles

The starting point for doing a competitive analysis is something I call competitive profiling. This process is the research conducted to get a complete view of who your competitors are, what they do, and their strengths and weaknesses. Think of this as your “pre-game preparation.” The output of this effort is a “Competitive Profile” – which is a detailed summary of each key competitor you face on a regular basis (usually a 2-page document, or small slide deck).

#2 Product Face-Offs

These usually involve creating tools such as feature-benefit checklists or side-by-side comparisons. Be sure to think about them from the buyer’s point of view since having product attributes that are not relevant from their perspective is a waste of time. It’s a good practice to think about your product comparisons in terms of:

  • Table-Stakes: The features that are minimum requirements. and
  • Differentiators: The features that add more value than competitive offerings

Other critical aspects of Product Face-Offs are quality, pricing, packaging and service and support levels. Going through this exercise will help you understand two important things:

  • The direction your product development needs to take, and
  • How to position more successfully against others with what you have today

#3 Win-Loss Analysis

Thoughtful forensic work on past sales opportunities will help you understand the reasons a buyer selected you, or your competitor. It provides key insights into the perceptions buyers have about your products, pricing, and approach. Even though we call it Win-Loss Analysis, people tend to focus much more on lost opportunities and often ignore the “win side” of the equation. Although it may have been a well run sales campaign (at least in the salesperson’s mind), there is still a great deal that can be learned when you ask people why they bought from you. For more information about the power of analyzing your “wins”, see Win Analysis: A Neglected Hero of Analytics.

How Much Detail is Enough?

Competitive Analysis can be as deep and detailed as you want. There is, of course, a rational balance between what you need to know versus the merely interesting. The level of depth you need for a Competitive Analysis and the types of information you gather, will be determined in large part by your industry and offering. For example, if you sell high-ticket products or services in multi-year contracts, or your products require a high degree of aftermarket support – then prospects will have more interest in factors such as the vendor’s stability, reputation, and service structure. In this scenario, your Competitive Profile will focus more heavily on those things. If the product is a one-time purchase with little post-sale interaction – an increased focus may be placed on factors such as the product specifications, pricing, return policies, etc. Before building a Competitive Profile template, you must decide what things will be most significant in your market.

Who Owns the Competitive Analysis Process?

Competitive Analysis is always a team effort, but typically Marketing drives the process and creates the frameworks and artifacts needed. If your organization is large enough to have a dedicated Product Marketing function, that group would normally be responsible. Sales will play the strongest supporting role in gathering the intelligence. After all, they are in the trenches day in and day out. Also, executives, customer support, service staff and anyone else who interacts with clients and prospects on a regular basis will be good sources of feedback. It’s important to make the process clearly understood and as simple as possible for those who contribute. A good practice it to use standardized templates and forms and make sure they get stored in a place that is easy to access – a folder on your company Intranet, or CRM as examples.

Using Competitive Analysis

Now that you have all this great information, how can it will it be used to help close more business? Marketing will use it for market positioning, messaging, and targeted competitive campaigns. Salespeople will rely on it to help them “position” and focus the prospect on the right factors in competitive sales cycles. The knowledge will also help your salespeople build credibility by showing they know their industry. It’s best to share Competitive Analysis through formal training sessions as new profiles are created. It’s also a good idea to make sharing competitive strategy and best-practices a formal and ongoing part of your sales meetings. There is some subtlety in leveraging competitive information. Sales must always be honest and tactful when contrasting with competitors, and they should never put a company, it’s product or people down! Those who blatantly “slam” competitors will seldom leave a good impression and at times it’s disastrous. Instead, sales should focus more on what’s most important to the prospect, how you positively differ from others, and how your offering will best satisfy the need.

Conclusion

Leads and opportunities are not easy or inexpensive to develop. The vast majority of sales cycles are tough battles fought against one or more adversaries. Competitive analysis will help you win more business if you invest the right amount of time, thought and energy into it. If you don’t have the bandwidth, resources or know-how, you may want to consider outsourcing. For a higher level view of industry analysis and competition, you may be interested in this good overview of Porter’s Five Forces Analysis.

I hope you have enjoyed this article and would love to hear your thoughts about Competitive Analysis or any experiences you can share. Please follow us on your favorite social feed and Contact us if we can help in any way.

Competitive Profiles – Build Them and Win More Often!

Competitive Profiles
Competitive Profiles

​In a recent article titled Competitive Analysis – The 3 Essential Building Blocks, I presented a framework for building a strong competitive analysis.

The three basic building blocks needed to gain a deep understanding of your key adversaries are Competitive Profiles, Product Face-Offs, and Win-Loss Analysis. Any one of these is valuable on its own, but when they are combined, you have the full and powerful picture. Today, we are going to focus on building Competitive Profiles. It should be noted that going through . . .

​“How can you win against an enemy you can’t see?”
Sun Tzu, The Art of War

Knowing your competition inside and out will help you: learn what others in your industry do; what prospects want; and how to position and differentiate your company with higher impact. All of which leads to more sales!

If this makes so much sense, why don’t companies do enough of it? Why can’t they sustain it once they have started? Great questions and a few simple answers come immediately to mind:

Competitive Profiles

​ 1. They have glossed through the exercise 5 years ago and feel they still have it covered
 2. They don’t make it a priority and it sits on a long to-do list somewhere
 3. There is no ownership or process to keep the information current
 4. They don’t know how to do it well or don’t have a disciplined process to manage it

​Competitive Analysis Overview

​A thorough Competitive Analysis consists of three basic building blocks: Competitor Profiles; Product Face-Offs, and Win-Loss Analysis. The ultimate goals of having this information are to help you win more often, with less effort and better margins. As you would suspect, sales and marketing leverage competitive analysis the most. However, the data will also provide essential inputs into critical decisions that impact your product development roadmap, overall business strategy and potentially M&A considerations.

Competitor Profile Components

Listed below are the typical elements of a detailed Competitor Profile. Not an exhaustive list, but the essentials. Again, some of these may be more or less important depending on your business.

Competitor Profile Components

A Competitor Profile starts with the background information about your competitor’s business situation, structure, and so on. If they are a public company, most of this data will be readily available. If private, then you will need to do more digging. The typical attributes you will want to know are as follows:

  • History: When did the company start? How has it evolved? What was the founder’s vision? What is their current focus?
  • Lines of Business: What other products and services do they offer? What percentages of revenue come from each LOB?
  • Structure and Size: Public/Private? Annual income? (particularly in the areas that impact your market), Number of employees?
  • Locations: Where is the head office?, Where are other offices, plants, and service centers?
  • Leadership: Who are the relevant key executives? (tenure, responsibilities, backgrounds, etc.)
  • Financials: How they are doing financially and how is the growth rate trending?
  • Reputation: How they are perceived in the industry and within your specific battlegrounds? Have they had previous legal issues, negative press, etc.?

Strengths / Weaknesses

​Perhaps the most useful element of the Competitor Profile is defining your competitor’s strengths and weaknesses (SWOT analysis), and this is often the starting point. There is always a subjective aspect in identifying strengths and weaknesses, but try to gain as much external perspective and as many hard facts as possible. Some of the best sources of this data include: learning gained from previous sales cycles; publicly posted reviews (social media, Glassdoor, etc.); and their customers, prospects, and former clients. An entire article that could be (and surely has been) written on how to gather this information, but the simple premise is that the more data and proof-points you have – the better! Making a statement about a competitor that your prospect knows, or believes is inaccurate will instantly dissolve your credibility. The only worse thing is making a comparison that is a distinct competitive slam. Every company has its weak points. If you look hard enough and talk to enough people, you will find them. It’s also critical that you identify and respect their strengths as well, so you can use your competitive strategy in the way that artfully deals with them.

Product Summary

This section is intended to provide a high-level overview of the offerings your competitors have that are comparable to yours. Unless what you sell is incredibly simple, the detailed product comparisons should be created in separate Product Face-Off documents. The information in the product summary of your Competitive Profiles would include:

  • Your competitor’s product names and brief descriptions
  • The name and brief descriptions of your products aligning with those stated above
  • The top 3 strengths and weaknesses of each product
  • An indication of whether your product wins more often, less often, or relatively the same in your deals (percentages would be best)
  • Relative overall quality and pricing comparisons (superior, equal, inferior for example)

Again, the idea here is that the Competitor Profile is a single view of a rival and not a 20-page document. It should give the reader a good “feel “of the products you are competing with and how your offering stacks up.

Target Market

This section is really about several things – who the competitor sells to and where, and how strong they are relative to your company. It also should include your win-rate against them in competitive situations – you can draw this from your Win-Loss Analysis. Some of the key questions to answer here would be:

  • Market Focus: What vertical markets do they target? How large are the companies they target? (small business, SMB, Enterprise, etc.), Are there new areas they are trying to break into?
  • Geographic Sandbox: Where do they sell? What are the overlaps with your geographic presence? How do you stack up in each region (win-rate, regional market share, focus, strengths, etc.)
  • Market Share: How big is the overall industry in which they are competing against you? Can you approximate how much share they own?
  • Customer Base: Who are their major clients? How much overlap is there with your client base? How much direct competition has there been for your large customers and theirs?

Go-to-Market Strategy

One of the more important factors in looking at competitors is how they market and sell against you and others. Knowing this will help you better prepare your go-to-market strategies. It will also help your sales people when going head-to-head against them. Some of the key questions to answer here would be:

  • Positioning: What are they trying to be to the market? (low price leaders, best service, highest quality, premium provider, etc.) What themes and messaging do they use to reinforce the positioning goal?
  • Value Proposition: How do they define their audience, offering, value and differentiation?
  • Marketing Effectiveness: How do you perceive the quality of their marketing program? What does their marketing strategy focus on? How are they building awareness in the marketplace? What tactics and campaigns are they using to drive engagement? How effective is their website, social media coverage, traditional media coverage and analyst recognition?
  • Channels: Do they sell through partners, direct, online, or a combination? How much of their business that competes with you comes from each channel?
  • Sales Team: If they have a direct sales team – what is the structure? Where are the people and are they well-trained? Is there a general style? (consultative, aggressive, etc.)

Finding Information About Competitors

Gathering the information that goes into a Competitive Analysis does take time and energy. Some find it better to outsource their competitive research which will cut down the work significantly. However, the most vital sources of input will come from your sales team and actual competitive situations. Here are a few ideas that might help you get started:

  • ​For competitors that are public companies, leverage readily available corporate SEC (US) and SEDAR (Canada) reports online.
  • Leverage government resources (Statistics Canada, public directories, etc.)
  • Go through your competitor’s website with a fine-toothed comb. This exercise will fill in the majority of your information gaps.
  • Scour online blogs, reviews, press releases and any other web resources related to your competitor and the industry
  • Have a formal internal feedback process to gather real-time input from sales, marketing, and other relevant stakeholders in your company
  • Ask clients or prospects who have dealt with them for information

Finding Information About Competitors

I believe that having the best possible “handle” on your key competitors will help win more business. If you agree, you may want to consider investing more time and energy into it. If you don’t have the resources or know-how, consider outsourcing. Hopefully, you have picked up a point or two here that helps. For a higher level view of industry analysis and competition, you may be interested in this good overview of Porter’s Five Forces Analysis on the MaRS website. Remember the famous words of Sun Tzu “Know your enemy and know yourself and you can fight a hundred battles without disaster.”

I hope you have enjoyed this article and would love to hear your thoughts about Competitive Analysis or any experiences you can share. Please follow us on your favorite social feed and Contact us if we can help in any way.

Selling Services: “In-House” is the Toughest Competitor

Selling Services
Selling Services

​In a recent article called Competitive Analysis – Know More, Win More!, I stressed the importance of getting to know your competitors.

​It struck me afterward that for those selling services, particularly in the B2B space, the toughest battle is usually fought against in-house resources. It’s often easy for us to lose sight of this vital fact, and I think there is a missed opportunity when we don’t pay it the attention it deserves.

​In-House or Outsource?

​There are plenty of arguments for and against outsourcing. Should manufacturing companies run their own cafeteria? Should legal firms run printing departments? If those activities are not core to their respective missions and strengths, then the reasonable answer is “no.”

There are certainly situations when running non-core functions in-house can make sense, but hidden costs and lost opportunity should always be major considerations. So why do companies hold onto activities that don’t serve a strategic purpose? Some common reasons are as follows:

  • They believe doing as much as possible in-house gives them more control
  • They think they are saving money (in some cases this may be true)
  • They have some capacity available and they want to keep people busy
  • Challenges in finding, trusting and then managing outsourcing partners
  • A previous bad experience with outsourcing – regrettably this can happen
  • For some business leaders, it’s a mix of ego and human nature – “why pay someone else to do it when we have people here?”

​Selling Services More Effectively Against In-House

​The intent of this article is not really to answer the outsource / in-house question. The goal is to get you thinking about the part of your market choosing to do what you provide, themselves.

You should view this group as a unique market segment and in a real sense, a formidable competitor. When selling services to these companies, you should be as strategic as you would when facing an external rival. Here are some ideas that may help:

  • ​Know your industry well enough to get a sense of the size of the “Doing-it-Themselves” portion of it
  • If a high ratio of companies in your addressable market are performing your services themselves, you need to know why and how
  • The insights from the point above will help your positioning and messaging have greater impact
  • If this is your situation, the messaging gets more heavily weighted on “why they should be outsourcing” first – followed by “why they should outsource with you”
  • Focus on clearly articulating the value of outsourcing – help prospects understand how they win!
    • Build a business case and use cost-analysis tools showing ROI and the advantages of leaving it to the experts. There is always interest in saving money and doing what makes sense for the company. It’s important to show the many hidden costs as well.
    • Point out how your prospect can focus on other aspects of their business that are more strategic. For example, if you are an IT hosting company, your message may be something like “Ms. Prospect, you are accountants. Rather than investing time and money managing servers, networks and storage – let us do that! You can reduce headcount and get IT working on internal and client-facing applications that will improve your business and help you differentiate.”
    • Show proven results and metrics from similar companies using your services. Leverage testimonials and case studies. – a sure way to gain the attention of your “in-house” prospects.
    • Build the “value of outsourcing” story into your presentations, sales talk-tracks and other collateral, and lead with it
  • Think about the migration path and be able to show them how they will transition. Again, use real-world scenarios and map out the processes you have in place to make it easy and smooth.

​Some of this may seem obvious but make no mistake – selling services requires a different kind of positioning. And, if you have a large portion of potential prospects written off because they don’t outsource now, you are missing a significant opportunity! Change your approach by heavily educating these prospects on why outsourcing makes sense. If not, your pitch will almost certainly fall on deaf ears.

Please share any thoughts or experiences you may have with this topic. Contact us if we can help you with your marketing in any way, or point you in the right direction.

Effective B2B Marketing -  6 Things you Absolutely Need!

Effective B2B Marketing
Effective B2B Marketing

Building an effective B2B marketing program can be a long, tough road. But, when investments are made the returns on your effort and patience will be generously rewarded.

How much thought do you put into your marketing plan – is it enough? Do you have clear, realistic goals? Do you have everything you need to execute properly?

My experience has been that many companies miss on one or more of these essential elements and end up being underwhelmed by the outcome. Getting great results from marketing is not an accident, and although there are many success factors, I believe six are most critical.

6 Key Ingredients of Effective B2B Marketing

#1 Strategic Planning

This is one of the most crucial components and the starting point of effective B2B marketing. When not enough time, focus or thought are invested in creating the plan, the rest won’t matter. The main aspects of good planning include:

  • A reliable process and a standard framework for mapping out your plan.
  • Research and analysis of the key inputs that should be used.
    • Internally-focused information including the value proposition; business objectives; budget; available resources; and historical results.
    • Externally-focused information including marketing segmentation and competitive analysis.
  • In-house planning expertise and skills – if you don’t have these, consider getting help.

#2 Realistic Goals

The budget has to be substantial enough to align with your goals. Determining this number can be difficult, but you have to do it. Looking at past results can help. Also, the objectives themselves need to be achievable in the timeframe you’re working with. Important considerations are:

  • The time-to-impact must be understood. What you do now will not bear fruit until some point in the future. This is particularly the case when sales cycles are long and/or complex.
  • Don’t underestimate the time it takes to develop ideas and execute. It takes longer than people think. When you’re involved in the more creative parts of marketing, inspiration isn’t something you can turn on like a switch.
  • Don’t forget about “foundational” work that still needs to get done such as administration, training, implementing tools, managerial duties, and sales support. These activities need to be accounted for.
  • Build at least a small buffer into your plan for unexpected requests and opportunities that may arise during a given period.

#3 Effective Prioritization

It all comes down to choice. Knowing what to focus on is a constant battle, but when research, data, and past results are used as guides, you increase the odds of better decision-making. Here are some other ideas that may help:

  • Determine what percentages of effort, time, and money you want to allocate to each major initiative. For most organizations, between 3-5 large-scale activities in a quarter makes sense.
  • Don’t focus on activities for the wrong reasons. Just because everyone else is doing it, doesn’t mean you should. Develop sound rationale when picking your mix. Know exactly why you should do what you’re planning.
  • Rank your top priorities and weight them accordingly. For example, in a given quarter you may decide to invest 40% of your marketing resources into building a new website because yours is outdated or your bounce rate is too high.
  • Don’t succumb to knee-jerk reactions and change your plan mid-stream. it’s easy to get side-tracked by “shiny objects,” but you must resist. Unless something new comes along that’s a sure winner – stick with the plan!

#4 Execution Excellence

It all comes down to choice. Knowing what to focus on is a constant battle, but when research, data, and past results are used as guides, you increase the odds of better decision-making. Here are some other ideas that may help:

  • Pay attention to detail in everything you do. Missed steps and sloppiness lead to poor results.
  • Don’t spread your team too thin – this approach usually leads to mistakes and frustration.
  • Build room in your campaigns for experimentation. Today’s technologies help us explore options before making larger investments. Pay attention to the data – if the first wave of a campaign fails but you believe you’re on the right track, you can still adjust.
  • Capture and nurture sales leads and be sure your follow-up process is iron-clad. Don’t waste potential opportunities you worked so hard to create!
  • Leverage everything as much as possible – this includes automation technology, your CRM, content re-use, etc.

#5 Continuous Improvement

Well-run marketing departments pay attention to the numbers. They use data to refine their approach, messaging, promotions and other tactics. Be sure to track, measure and analyze everything relevant to your program and focus the following:

  • Don’t waste time tracking metrics that don’t matter – this is a common trap for some.
  • Stop doing things that don’t work. I’ve seen marketers do things year after year that add no discernible value. Sure, you need to give things time. But, know when to cut your losses.
  • On the flip side, press the gas pedal harder when you find things that work. Keep track of your trending, though – with some activities, you reach a point of diminishing returns and may decide it’s time to re-adjust.
  • Keep learning and growing. It’s a fast-paced, competitive world. You need to keep up with the trends and technologies that impact your marketing. Always look for better ways to do things.
  • Understand that what really counts is how your marketing program helps create leads and opportunities. Marketing KPIs showing progress are important, but always remember that the ultimate goal of marketing is to help increase sales.

#6 Determination and Consistency

Finally, creating an effective B2B marketing program is not a one-shot deal. It’s cumulative and must be sustained over time to work. This is particularly the case with social media. If you are not looking at marketing as a long-term investment, save the money and do something else because you will be disappointed otherwise. The good news is that with solid planning, execution, and continuous improvement – marketing will pay for itself many times over once you create the momentum.