Tomicide Solutions, June 2016

Six Client Acquisition Obstacles IT Marketers Face And How To Handle Them

By Tom "Bald Dog" Varjan

Andrew Jackson, the seventh US president, once said...

"I have no respect for a man who knows only one way to spell a word."

Interestingly, many IT SME leaders know three ways of spelling the phrase "business development".

  1. Cold calling grunt work

  2. Pavement-pounding drudgery

  3. RFP lunacy

In terms of grammar, all three are 100% correct.

In terms of common sense and profitability, all three are as flawed as my solar-powered pancake griddle.

Then why do so many IT SME leaders insist on performing these random acts of uselessness?

In most cases it's not because they believe in these methods.

They use them because they have serious conceptual problems in their heads.

And the problem is based on the now obsolete sales techniques they learnt a long time ago from the sales gurus of the 70s and 80s.

But the same tricks and tactics that worked almost 40 years ago don't work anymore.

40 years ago it was easy to cold call people and have them listen to salespeople's pitches.

Today it's virtually impossible.

No, it's possible. It can work.

What I really men is that each of the three methods I listed above undermines your status as a premium-priced respected industrial authority and repositions you as a budget-priced replaceable vendor.

Buyers Are Getting Harder To Reach

In 1991 Faith Popcorn wrote the Popcorn Report, explaining that the trend was cocooning, that is, people wanted to be left alone m ore than ever before.

If that was the case in 1991, it's fair to say that in 2016, people erect massive walls around themselves with wide moats filled with alligators and water moccasins and vicious bodyguards just in case some intruders can cross the moat.

Buyers are pretty much the same.

In buyers' companies, most economic buyers are boardroom calibre executives with pretty extensive employment history in their current companies. They understand the culture, their companies' values, visions, missions, long-term goals, and strategies. They are intimately familiar with their companies' afflictions and aspirations.

Add to this that, according to the International Association of professional organisers, on average, the typical executive has 59 hours of urgent work on his desk with a big chunk of this work already grossly overdue.

But due to interruptions, executives perform only 28 minutes of revenue-generating work a day. So, they take almost 360 eight-hour days to catch up with this backlog. And we haven't talked about their normal work yet.

By contrast, on the seller's side, salespeople are the most fungible and expendable items on the payroll.

They are coming and going at an annual rate of over 48-74% and are at or very near the bottom of their companies pecking orders. Due to the high attrition rate and need to have salespeople hit the road running and start selling as quickly as possible, they can never earn the status of trust and respect in their companies.

Now, give me one, only one reason why buyers should even meet and talk to salespeople.

Realistically, and after removing all biases, there is none.

The corollary to this is that when salespeople are perceived as recognised experts, representing a respected industrial authority of a company, those experts are 70% more likely to walk away with a sale.

It Gets Harder And Longer To Gain Buyers' Attention

As we discussed it in the previous point, buyers are busier than a one-legged man in an arse-kicking contest and do everything they can do to make sure sellers can't reach them.

They work on some pretty urgent and important initiatives, so they protect their focus and attention in any way they can.

Here are some interesting numbers for your consideration.

A 2001 Cahner Research's study reports that the typical B2B buyer takes 4.61 telephone sales calls a week and grant 1.81 in-person meetings salespeople every week.

Acording to the Corporate Executive Board, there are 5.4 (basically, six) buyers in a typical B2B scenario.

Now, how many telephone calls do you have to make to be one of the 4.61 callers to get through?

How many more calls do you have to make to be one of the lucky 1.81 sellers to meet the buyer in-person?

How many more calls do you have to make to play this game with all six buyers?

As you can see, buyers' attention is not easy to infiltrate.

But there is a difference here.

If you try to get the buyers' attention through salespeople (real time or synchronous communication, like phone, in-person, etc), you're more doomed than a mouse at a cat convention around lunchtime.

And even if you get buyers' attention, they are tense, sceptical and cynical.

But you try to get buyers' attention through sales collaterals (offset time or asynchronous communication, like email, snail mail, recorded webinar, etc.), you have a much better chance.

And when you get buyers' attention, they are relaxed and open-minded.

Note that it's not your materials that make buyers tense when meeting salespeople. It's the presence of a salesperson with all the attached negative baggage and stigmas.

And salespeople's public stigmas are not exactly rosy.

The other factor is the communication channel.

You have to use those channels that buyers can check whenever they want to.

Stay away from programmes that "push" your content onto people's desktops and interrupt them. I hope you can see why they hate that method.

The Absence Of Certain Standards In Client Acquisition

It's not a new fact that business development people get replaced pretty rapidly.

According to Spencer Stuart's 12th annual study, the average tenure of a CMO in 2015 was just over two years, and rapidly declining.

When new CMOs are hired, the goal is not to develop some marketing standards but to hit the road running and work hard on producing unprecedented results for the next fiscal quarter.

As a result, with every new CMO, the company's whole marketing changes hook, line and sinker.

It's like changing Coca Cola's logo and some ingredients in the secret recipe every time the company changes CMOs.

Without certain standards, CMOs just improvise and what they've done in other companies under different marketing conditions.

No, I'm not saying CMO's creativity should be hindered, but there must be some guidelines.

The "make money at any cost" mantra can lead to serious problems.

When you drive, you want to reach your destination but not by speeding or driving in lanes that happened to be less busy than your normal lane.

Imagine that CMO A starts a direct response marketing campaign and then after two years she is replaced by CMO B who doesn't believe in direct response marketing, so he starts an image (institutional) marketing campaign.

I would add to this that CMO A is a self-educated and market-validated professional without formal academic marketing influence. She's a direct response expert in marketing and selling unique products and services to niche markets.

CMO B is different. With his MBA, he's skilled in institutional image marketing and an expert at marketing mass produced and commodity-priced products and services to the unwashed masses. That's image marketing.

CMO A builds a direct response marketing campaign that later CMO B tears down and rebuilds as a "big corporation" image marketing system.

But by the time CMO B can implement his image marketing campaign, he gets replaced by CMO C, and the madness starts all over again.

This company can never gain traction in the market because every time there is a little progress, it gets destroyed.

I've read somewhere that one of the biggest business (not only marketing) illnesses SMEs suffer from is to believe that SMEs are the same as big corporations but smaller. And this belief kills SMEs left, right and centre.

I would suggest that you recruit a good CMO with solid direct response knowledge and good personality and keep that person in the long run.

What about the MBA?

Never mind.

Look at most so-called marketing gurus out there, like Jay Abraham, Dan Kennedy, Joe Polish and many others. Most of them have nothing more than high school diplomas, but have become marketing legends based on results.

Oh, and have multi-millionaires based on the value that they have created for their clients.

Can you say this about even one college professor?

No.

They hang in for dear life for tenure, their next paycheques and their government pensions.

So, hire people who've studied with real world masters.

Think about it for a moment...

Do you prefer to have a CMO with a fancy piece of paper who's spent years to learn his craft from glorified civil servants (a.k.a. college professors) in government-mandated and government-protected jobs with artificially bloated salaries and lush government pensions who've never practised in the free market economy what they teach?

Or do you prefer someone who's spent her time in the deepest trenches of the free market, learning what works and getting paid in direct proportion with the money she generates?

Let's recognise the difference between a $50 billion publicly-traded behemoth and a $500 million privately-held SME.

One big mistake SME leaders make is that they think they can operate as if they were small publicly-traded behemoths.

They're not. It's a different dynamic. A totally different business model.

First, if you build your business from scratch, you're a dirty capitalist.

But, if you get hired as the CEO of a company that is notorious for bending and even breaking the law, you can easily become a corporate celebrity.

If you run your SME to the ground, then you go bankrupt, starve and kick the bucket.

But if the big company CEO runs the company to the ground, then he gets a $10 million plus severance package and a hefty company pension from the very company that he's just bankrupted.

So, there are differences.

Difference In Accountability For Sales And Marketing>

In order to make life easier, SME leaders try to individualise business functions.

After all, it's easier to set individual quotas than find ways for the whole company team to perform better.

The former is just regular measurement coupled with some cajoling and threatening.

The latter requires some thinking.

Have you noticed that military generals don't try to win wars by setting individual quotas of enemy corpses for frontline soldiers?

But it's become conventional wisdom in the business world.

For instance, if the product is crap and can't be sold, instead of improving quality, many business owners blame salespeople.

After all, the prevailing orthodoxy is that good salespeople can sell sand to the Bedouins.

Then, prevailing orthodoxy continues: Good salespeople should be able to sell crappy products.

Improving quality is expensive but reprimanding and threatening salespeople are easy.

Add to this fact that marketing folks and salespeople are separated, and they hardly talk.

In most cases it's not a problem because marketing's goal is not to make the product more sellable.

Marketing folks are busy creating new logos and slogans. They believe, it's not their job to generate revenue. They live on what the sales folks generate.

As a reward, marketers get praised for their creativity and get pay increases, while sales folks get beaten up for underperforming.

While both sales and marketing are the parts of business development, in most IT SMEs don't find vice president level business development person.

There is a VP of sales and both the marketing manager and the business development manager report to him.

My experience is that when we pull together sales, marketing and all other people who work on getting and keeping clients under one roof, it is a good thing.

Everyone in the process must see the full picture of client engagement.

The military learnt a long time ago that if you want people to work in teams, they have to train in teams and teams must have as little attrition as possible.

Before reaching optimum performance, just like a good pair of shoes, teams must be "worn in". So, don't expect a freshly formed team to perform miracles. Give your team time to form into the perfect "alloy".

A CSO Insights research study (Jim Dickie, Barry Trailer, CSO Insights, "Optimizing Lead Generation - What's the Payback?", June 2006.) concluded that companies with clearly defined lead generation and management practices have: 9.3% higher sales quota achievement rate than the rest and 16.5% higher lead conversion rate than the rest.

Sadly, only 10% of B-to-B companies have lead definitions that both sales and marketing have agreed upon prior to campaign deployment.

Inconsistent Evaluation To Justify Marketing Investments

Marketers know that the only way they can get budgets for their campaigns and keep their jobs is by showing return on investment on previous budgets. Basically, they have to show that they generate revenue.

If this ROI is missing year after year or quarter after quarter, the marketing director soon goes missing too and rather permanently.

This is not a problem in large corporations because they use image marketing and say that marketing can't be quantified, they keep pouring more money even into dud campaigns.

And there is the world of direct response marketing, the type of marketing entrepreneurial SMEs use because it can be measured.

Just watch video to see the difference. David Ogilvy: We Sell or Else.

But just because something can be measured doesn't necessarily mean that it should be measured and especially reported to management.

For internal use, it's useful to measure email open rates or click-through rates, but they are irrelevant to the boardroom dwellers.

They want to see less abstract and more concrete indicators. X contacts made, Y leads generated, Z proposals submitted and $ revenue generated.

There must be a huge difference between a boardroom level marketing dashboard and a marketing departmental dashboard.

The boardroom-level marketing dashboard looks like the dashboard of a Trabant that famous East German very compact car (body made of plywood, 2-stroke 600cc engine, 0-60 km/h in 26 seconds).

The marketing departmental dashboard looks like the dashboard of a Boeing 747.

There must be a huge difference between a boardroom level marketing dashboard and a marketing departmental dashboard.

It's Hard To Migrate To Newer And More Up-To-Date Marketing Systems

Most IT SMEs start out as one person operations in spare bedrooms or two people fiddling around in garages, using Microsoft Excel for most automated processes (sales force automation, marketing automation, project management, etc.).

Later they evolve to Salesforce or whatever system they decide to use, but the humble beginnings are very similar.

But the sheer preponderance of software can be a bit overwhelming, and it's hard to find the balance of the company's "evolution" level and the required software.

Just as it's foolish for a five-person company to run its business development on the Salesforce/Pardot combination, it's equally foolish to run a $500 million a year company's marketing on Insightly.

Both Salesforce/Pardot and Insightly are great at what they do, but they are for companies of different size.

But it's just unavoidable that as your company grows, you need to shed some old and less effective systems and move to new and more effective systems, and every move, just as in moving house, is painful. Something always gets cocked up and goes missing, often permanently.

And what happens to companies that are reluctant to migrate to systems that they really need? They try to make up for the lack of automation with more manual labour.

And we all know what the result is.

Quality sales leads fall through the cracks or fall victim of other forms of human error.

And we know that lack of consistency, predictability and repeatability undermines the brand.

And the profit loss due to diminished brand recognition is significantly higher than the cost of migrating to the appropriate automation system.

The other question is how far to go to integrate systems.

In the age of the integrated printer/scanner/photocopier/fax/phone/etc., I still prefer to have my printer, scanner and the other bits and bobs as separate units.

Similarly, I don't want to have an integrated fridge/freezer/washing machine/TV/food processor/dishwasher/ DVD player in one huge box.

I don't even want to have an iPhone/lawnmower/vacuum cleaner combo.

I prefer to have them separately, so if the vacuum cleaner conks out, the phone is still fully operational.

Not to mention how stupid I would look in the gym with big honking box strapped to my back, so I could listen to my morning educational materials.

So, have a separate...

You just have to know when you need integration and when you need separation.

On Summary

In my experience, the biggest client acquisition problem is that instead of treating it as business development, many IT SMEs treat the subject as sales and marketing.

The sales department, with its tiny and rather Spartan cubicles, is on the ground floor, so salespeople can quickly run in and out of the building as they roam the land to find doors to knock on.

As a bunch of disinherited corporate bastards, they are kept as far from the executive offices as possible, so besides using up the money that they generate, no one has even to greet them or talk to them.

The marketing department is different. It's in one of the better sections of the corporate premises, close to the boardroom and other executive offices, so marketing managers can easily run over to the executives and brag about what master plan the marketing people are working on.

What new slogan they've just invented and which logos they're re-designing to make sure the corporate brand creates more buzz in the marketplace.

From time to time, sales folks interrupt them, so marketing folks have to produce sales collaterals. Sadly over 50% of those materials are useless for sales. Nevertheless, marketing keeps producing them.

As long as business development operates as two separate engines thrusting the corporate fuselage forward, the results will be rather disastrous.

And if you can address some or all of the six points we've just covered here, you get a lot closer to your goals.

Attribution: "This article was written by Tom "Bald Dog" Varjan who helps privately held information technology companies to develop high leverage client acquisition systems and business development teams in order to sell their products and services to premium clients at premium fees and prices. Visit Tom's website at http://www.varjan.com.