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DM DAY 2001 Fundamentals of Direct Marketing to Business or B2B

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Provide you with insights into the major change that is occurring today in B2B ... The 'selling' model is busted as costs are up and efficiencies are down. ... – PowerPoint PPT presentation

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Title: DM DAY 2001 Fundamentals of Direct Marketing to Business or B2B


1
DM DAY 2001Fundamentals of Direct Marketing to
Business or B2B
  • John M. Coe
  • President
  • Database Marketing Associates
  • Scottsdale, AZ
  • 480-778-9900

2
My Objectives Today
  • Present the fundamentals B2B direct and
    database marketing we are going well beyond
    just the fundamentals.
  • Provide you with insights into the major change
    that is occurring today in B2B as we are in the
    mist of a true revolution in how B2B companies
    are using direct marketing.

3
Agenda Approach
  • Trends in B2B
  • Segmentation the head of it all
  • Targeting the right people
  • The four leverages to success
  • Offer strategies
  • Creative
  • Integration with sales distributors
  • Testing and measurement
  • Talk very fast hand outs will help

4
Your Two Jobs Today
  • Sell More
  • Spend Less
  • Both

5
(No Transcript)
6
B2B Trends
  • Since the late 1940s until the early 1990s the
    go to market sales model has been the same.
  • Starting in the mid-1990s dramatic changes
    started to occur and have given rise to new B2B
    strategies.
  • There are several strong trends driving these
    changes -- the most important of these are

7
1. Clutter Sensory Overload
  • Communication clutter is increasing dramatically
    and is getting worse
  • 1999 Intertec study revealed that
  • A six fold increase during the last 20 years in
    messages we see or hear in our daily lives has
    jumped to 3,000/day.
  • Advertising Age reported last year that its now
    5,000 /day.

8
Message Clutter in the OfficeWSJ 189 per day
  • 52 phone calls
  • 36 emails
  • 23 voice mails
  • 18 postal mails
  • 14 faxes
  • 18 interoffice
  • 13 post-it notes
  • 8 pages
  • 4 cell phone
  • 3 express mails

9
More Clutter2000 Pitney Bowes Study
  • 204 messages/day for US office workers.
  • UK is 191 -- up from 138 in 1999
  • Germany is 178 -- up from 154 in 1999
  • France is 165 -- up from 124 in 1999

10
Result
  • Increasing clutter and the sensory overload has
    caused a breakdown of the awareness behavior
    model.
  • Direct marketers desire a behavior.
  • We need to break through the clutter and thats a
    very hard job today!

11
2. The Slow Death of the Sales Call
  • Cost
  • average cost per call is 350-400
  • several companies report 1,000
  • yesterday visited a firm -- cost 2000
  • Efficiency
  • calls to close a complex sale is up from 5 in
    1990 to 8 -- 10 today
  • calls per day have declined from 4 to 3
  • Desirability
  • Customers dont want to see salespeople

12
Result
  • The selling model is busted as costs are up and
    efficiencies are down.
  • Business buyers and influencers dont want to see
    sales people today.
  • A new method to cost-effectively contact
    potential and current customers must be found.

13
3. More Complex Buying Process
  • Number of people involved has increased
  • Types of functions have expanded
  • Multiple locations of people
  • More complex competitive matrix

14
It Gets Worse for Database Marketers
  • Think back to last May
  • What has changed on your card?
  • Name
  • Title and/or function
  • Company name
  • Address
  • Phone number
  • email address

15
Some scary results
  • In 1992 change rate was 62
  • 31 changed companies
  • 31 changed within the company
  • Results to date in 2001 show a 72 change rate
    a 10 increase.

16
B2B Companies are now --
  • Working to bring together their internal data on
    customers, prospects and market segments.
  • Rethinking how they market and sell.
  • go to market strategy
  • Searching for outside assistance to help as few
    internal experts exist.

17
The New Sales Coverage Model
  • The evolution is taking place today.
  • Revolves around direct marketing being integrated
    with sales.
  • Requires a database not a list.
  • Called many things -- Relationship Marketing,
    CRM, 1to1, etc.

18
The Three Processes All B2B Marketers Must
Perform to Arrive at List Selection
  • Profiling -- Where are you today?
  • Targeting -- Where do you want to go?
  • Segmentation Whos going to take you there?

19
ProfilingWhere are you now?
  • Analysis of current customers and prospects
  • looking for insights
  • dependent on quantity of firms and quality of the
    data
  • your decision on quantity - be careful
  • use SIC/NAICS and company size to start

20
PROFILING
  • Customer profiling-internal comparative analysis
  • Common tabs
  • Value -- Profitability, Servicing
  • Industry SIC now soon NAICS
  • Size Number of employees vs.
  • Geography SCF, area code, zip code
  • Major purpose of customer profiling is to
    establish best segments and then market to
    mirror image suspects.

21
Next Step In Profiling
  • Penetration analysis of market
  • calculates the percentage penetration
  • need to be careful on statistics--cell size
  • provides a more objective view of opportunity to
    sell new customers

22
PENETRATION ANALYSIS MATRIX (an example)
23
TARGETING WHERE SHOULD YOU GO?
  • Four sources of the targets
  • 1. Results of profiling
  • . New/emerging market opportunities
  • . New product/service introductions
  • . Competitive opportunities

24
TARGETING -- TIPS
  • Recent inquiries/leads may provide a more
    current reflection of market interest.
  • Be sure that data definition of the target
    markets can be linked to outside data.
  • Not all targets are created equal an economic
    valuation of the targets helps set marketing
    priorities and resource allocation

25
SEGMENTATION WHOS GOING TO GET YOU THERE?
  • Macro segmentation -- how your company or group
    is organized to go to market
  • Micro segmentation -- clusters for direct
    marketing campaigns
  • One-to-one segmentation -- field or telesales
    targets (is also advanced database marketing on
    the Internet)

26
SEGMENTATION WHY DO IT?
  • Leads to relevancy of communication and offer.
  • Tighter targeting -- save money.
  • Establishes the most important data elements for
    the database.
  • Creates more customer focused communications vs.
    product proud
  • Can be used to pre-qualify leads

27
SEGMENTATION DANGERS
  • Too many segments -- too many projects or too
    little time
  • Wrong criteria chosen for segmentation
  • Inability to obtain and/or update the data

28
MICRO SEGMENTATION DEFINITION
  • Micro segmentation is a process of grouping
    together individuals and/or companies who share
    common characteristics into clusters that are
    relevant to your product/service, selling process
    or company.

29
DEMOGRAPHIC SEGMENTATION
  • Geographic
  • SIC/NAICS
  • Employee size or revenue
  • Location type -- headquarters, plant
  • Year founded
  • Fiscal year

30
RELATIONAL DEMOGRAPHIC SEGMENTATION
  • Factual information/data that is linked to the
    selling opportunity
  • E.G. Equipment in use
  • Sales input can be helpful in identifying the key
    relational data element(s)
  • Untapped opportunity for most
  • Increase in relevancy
  • Leads to stealth marketing

31
SALES CYCLE SEGMENTAION
  • Suspect
  • Inquiry
  • Qualified lead
  • Proposal/quote
  • First purchase
  • Repeat purchaser
  • Long term or high value customer
  • Past customer

32
COMPETITIVE SEGMENTATION
  • Direct competition--usually the name of
    competitor
  • Indirect or alternate solutionoffset solution as
    competitive definition
  • Why change or status quo attitude
  • Budget prioritization or restriction

33
BEHAVIORAL SEGMENTATION
  • General inquiries
  • Response to specific offers
  • Trade show or seminar attendance
  • Multiple inquiries -- company or individual
  • Purchase
  • Calls to customer service
  • Others

34
CUSTOMER SEGMENTATION
  • Product/service standard analysis of
    transactions
  • Geographic clusters
  • RFM (recency, frequency monetary)
  • Influence of prior effort by sales people and/or
    business partners

35
Who to target?
  • Outline the buying process for each major
    segment.
  • Determine the individual, by job function, that
    is involved at each stage of the buying process.
  • Attempt to then list the job titles for each
    function and they then become your selects for
    the list order.

36
Types of B2B Lists
  • Compiled
  • Response
  • Co-op
  • Pooled leads
  • Developed
  • Customer
  • SRDS

37
Four campaign elements that leverage DM results
  • List 50 -- 75
  • Offer 20 -- 30
  • Sequence Frequency 20 -- 30
  • Creative media 10 -- 20

38
How should we deploy the 4 contact media in a
sequence and frequency pattern?
  • Email
  • Snail mail
  • Telephone
  • Face-to-face

39
Primary Contact Media
  • Integration of the 4 targetable media.
  • Media of contact Cost per contact
  • email 0.05 -- 0.50
  • snail mail 0.75 -- 1.50
  • telephone 10 -- 25
  • sales call 250

40
What offers would advance the buying process?
  • Suspect to inquiry
  • Inquiry to prospect
  • Prospect to qualified lead
  • What is a qualified lead?
  • Qualified lead to customer

41
Offer Types
  • Soft offers - inquiry generation
  • Information of value offers - lead development
  • Hard offers - closing or hand off to sales
  • Multiple offers - self qualification

42
Creative - how to have more fun!
  • B2B can be more creative than consumer as pay-off
    is much higher than consumer.
  • Why is business communication frequently so
    bloody boring?
  • Business people are human too!

43
The Creative Triangle
  • The creative process is copy led
  • Art or graphics follows the copy
  • It is important but just does not start the
    process
  • Production should be involved in the creative
    process

44
The Integration of Sales and Business Partners
  • The new sales coverage model is an integrated
    model.
  • Integration with sales involves
  • lead hand-off and feedback
  • data input on contacts
  • Obtaining cooperation from business partners may
    be the hardest job!

45
A Word About Testing in B2B
  • Almost never done! Why?
  • What to test
  • list
  • offer
  • sequence and frequency
  • Testing methods
  • A/B split test is most common
  • Small sample then roll out

46
How should we measure results?
  • Response rate
  • Cost per inquiry
  • Cost per lead
  • Cost per sale
  • Value per lead - transition point
  • Break even
  • E/R
  • ROI
  • LTV

47
Measurement Issues
  • Whats the average length of the sales cycle?
  • We want to measure too quickly
  • If you dont measure youre not a direct
    marketer!
  • Try to move from activity to result measures if
    you want to prove that direct marketing works in
    B2B

48
To Sum Up
  • B2B Direct Marketing Sales are forecast to be
    792.8 billion in 2000 -- an increase of 10.6.
  • This is double the growth of all B2B sales --
    penetration is being made!
  • Direct and database marketing is playing a much
    more significant role in the overall marketing
    and sales model.

49
Thanks for Attending
  • Questions -- call us at 480-778-9900
  • White papers -- give me your card to be on our
    list.
  • By By
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