In a four-part article series, we look at the role data plays in improving your understanding of your business, customers, marketing and interaction strategy. Think of it like a first date with your data; you may learn something new or it may be revisiting existing knowledge, but without a first date you won’t get a second.
Part three: Replicating ideal customers in your prospect pool
If you are a B2B organisation or a B2C organisation for high involvement, low volume, high value purchases, data can also help your lead generation, nurturing and progression of suspects to prospects to sales opportunities.
First, let me scare you a little…CRM!
To do any type of individualised treatment or marketing, you have to have some kind of repository for customer data that is keyed to a single customer record – typically these are Customer Relationship Management (CRM) systems. Back in the nineties, CRM was a dirty word but modern technology and groovy vendors have rescued at least the concept if not the acronym from the ‘wash-your-mouth-out-with-soap’ list.
Ideally, every item of customer information should be accessible from the customer’s CRM record – purchase history, support calls, product holdings, delivery address etc. Don’t be mistaken, linking all data info a single record can be brutally difficult – just look at financial institutions and the amount of ink (or pixels) and discussions about ‘siloed data’.
With a CRM in place that also records sales opportunities and outcomes within the CRM system, you should be able to calculate how many leads your marketing needs to produce to achieve sales targets. It’s called a reverse funnel and you’ll need historic data to make it work (while living with several broad assumptions).
It goes like this:
Take last year’s revenue and divide it by the number of deals done to get your average sales size. If your sales are lumpy throughout the year, you can break the calculations into quarterly ones. Check your number of sales opportunities and calculate your won to bid ratio – #won : #opportunities (eg. 1:5 means you win one deal out of every five that you bid). Now calculate your bid to lead ratio – #opportunities : #leads (eg 1:100 means you need 100 leads to get a qualified opportunity). Now you have all the historic data to build the reverse funnel for this year.
Divide this year’s revenue target by the average sales size to get the number of deals needed this year. Multiply the number of deals by your won:bid ratio to get the number of opportunities needed. Multiply the opportunities by your bid to lead ratio to get the number of leads your marketing needs to generate to make your annual sales targets.
||Calculations & ratios
|Number of deals won
||Ave deal size = 4000
||=380/4 = 95
||Won:bid = 60:200 =1:3.33
||=95*3.33 = 316
||Bid:lead = 200:5000 = 1:25
||=316*25 = 7900
As a marketer, I’d need to generate nearly 40 percent more leads this year than last year if the sales guys have a hope to meet their targets. Yes, this is simplistic and there are other levers you can pull (for example: improving qualification so you only bid on those you’re more likely to win will improve the ratios) but you can immediately see the scale of the effort needed for this year – for budgets, staffing and technology.
To find the additional leads look back at last year’s won deals. Draw out similar characteristics to start building a persona (see part 2) of your ideal customer. For B2B it will include organisational definitions across variables like location, staff numbers, decision-makers, revenue, profitability etc. If you don’t do post-deal reviews (a standardised procedure that reviews any won or lost deal to discover the elements that attributed to the win or loss), ask each sales person why they think they won the deal and see if collectively a trend emerges (Note: while price may have been important, look for elements other than price – it’s easy to replicate price, not so for other elements).
Once you have your ideal customer persona, overlay those characteristics on every lead or prospect you have. Technology can help to isolate leads closer to your persona as well as initiate conversations and nurturing strategies. This can make a huge difference to your marketing by providing the means to achieve faster, more relevant, one-to-one types of interactions rather than blasting one message to every customer. The more relevant your marketing, the stronger the customer bond and the more successful you will be.
But don’t start with technology. Begin with staff mindsets, strategies and knowing your business model and then fit the technology to your business. Technology vendors even say the same thing.
‘Spend 90 percent of your budget on your people and their development of processes and methodologies, and spend only 10 percent on technology,’ says Will Scully-Power, managing director at Datarati, a marketing automation, analytics and optimisation company. ‘Most SMBs make the mistake of doing it around the other way.’
Marketing automation systems help you do more with less by letting the technology do the mundane tasks so you can concentrate on marketing strategy, devising content and designing future campaigns. It also adds a marketing funnel to the sales funnel we calculated previously. A marketing funnel fits in the lead to opportunity section of our sales funnel and acknowledges the decision making process that moves a lead to a prospect and a prospect to a ‘highly likely to be’ opportunity that is sometimes called a ‘sales-ready lead’ or ‘marketing qualified lead’. The marketing funnel uses each and every customer-to-company touch to gauge (or qualify) the buying signals so only those most likely to be opportunities you can win are worked on by the sales staff (improving the bid to win ratio we discussed earlier).
Beyond this application of ideal characteristics approach is predictive analytics where current customer behavior and signals can be used in sophisticated analysis to predict specific future behavior such as likelihood of churning or likelihood of accepting cross-sell offers. It’s also where the ‘creepy’ line lives – we go knocking on its door in the next instalment.
(Note: Marketing automation linked with attribution and revenue models can really turbo-charge marketing performance and is worthy of a separate article – coming soon!)