How you’re missing most of the business you deserve
Contributor John Steinert explores funnel leaks and other blind spots that kill your ability to compete.
Before I begin describing six common leaks in B2B funnels, start by asking yourself if your inbound funnel throughput has a chance of growing your total share of your market. If you’re like most companies, it probably doesn’t. It’s simply impossible because you’re likely not even seeing all of the demand that exists in the marketplace.
If you did, you would have more deals in your pipeline and – if you close well – that would lead to more market share. It’s a simple fact that many companies simply aren’t able to access a large percentage of the deals happening in their markets because they either don’t have the SEO strength to draw them in, they haven’t implemented a better way of discovering them, or both.
Here are six critical demand leaks you need to address:
1. Active Total Addressable Market (TAM) blindness
There’s a whole world of demand out there that you never see because it’s not in your database and it’s not coming to your website. Unless you have the most incredible SEO pulling power the world has ever seen, you can’t survive on inbound alone — no business that I’ve ever encountered can.
And no one I’ve encountered has enough salespeople, even with an indirect channel strategy in place, to cover the kinds of far-reaching accounts and competitive presence that typifies a lot of markets these days. So why are there so many companies that are still trying to make it without marketing at scale? I don’t get it. Maybe it’s because they have “Active TAM blindness” (ATB)?
The larger you are, the longer you’ve been in business, or the more broadly you’ve distributed list acquisition authority, the more likely you are to suffer from Active TAM blindness. Large companies tend to have large prospecting databases. That makes them think they’ve already got the names they need and that they simply need to “market to them.”
Companies that have been in business a long time convince themselves that they know their markets — always a way to end up blindsided. And when companies let anyone and everyone within their organization buy lists that look good to them, they keep falling into the trap of not following a strategy and not concentrating their efforts for maximum effect. All of these are telltale symptoms of ATB.
To cure ATB, you have to start by acknowledging the market share you actually have. You then need to calculate what share of the rest of the total market you could reasonably serve. From there, you can calculate the total deals-in-process in any given time period that you’re not seeing in your lead funnel (this is the Available Demand Gap I discussed here last year). That will clear your vision. Then you need to find that demand and contest it.
The best places to look for demand in any industry are all the places on the internet where buyers in your category do their research. The second-best place is where the leading influencers of those buyers tend to hang out. The easiest way to gain insight into who’s buying right now is to access a reputable source of real purchase intent data.
2. Nobody who’s never heard of you loves you
Don’t think, though, that once you find the buyers, they’re going to immediately pay attention to you. It takes work to attract buyer interest.
I’m old enough to remember the time when you’d see a Toyota on the road and go, “Wow, what the heck is that?” (It may have been 10 years after they first started marketing in the US, but my Nana’s Corolla was the first one I’d ever seen. (At around the same time, Bond was driving a super-cool 2000GT in the movie “You Only Live Twice.”) It took Toyota something like 18 years to surpass VW in the US market.
Many of you may be old enough to remember when GM, Ford and Chrysler still owned the car market in America (OK, maybe you’re old enough to have at least read about what happened), accounting for more than 80 percent of US cars sold in 1970.
While their share in the car market has eroded significantly over time due to a number of factors (including aggressive marketing from foreign car manufacturers), you may be surprised to learn the top 3 pick-up truck makers, all US companies, captured 83% of the US market in 2017.
Meaning they still have an overwhelming share in this category. But do you think they’ll be guilty of resting on their laurels? I don’t think so. If you’ve watched broadcast TV lately, I’m pretty sure you’ve seen American pick-up truck advertising. The overall point here is that strong brand presence directly impacts sales.
It seems so obvious when we talk about consumer products. If you work hard to find the folks who should know about you, you have to continue that process to make sure they really do.
This reality is why our analysis of 1,500 campaigns shows that consistent advertisers can increase their consideration among buyers by 25 percent, yielding conversion rate benefits all along their funnel.
3. An entire culture of failing funnels
One of the major leaks in your funnel is right at the top.
When you look at the demand that actually gets into your funnel, Terry Flaherty, the senior director of demand creation strategies at Sirius Decisions, has pointed out that the lead funnel “as currently defined and measured has a 99% failure rate.”
So, for every hundred names that go in the top, one closed/won deal comes out the bottom. Let’s agree that most of the stuff that goes in doesn’t help your bottom line. It’s the reason Sirius Decisions added the slice they call “Active Demand” just under the top of their newest Demand Unit Waterfall (DUW) iteration.
Why do we continue to make the same bad choices? I think it’s because of cultural inertia. KPIs get created to help drive a particular need and then they become embedded in processes and traditions long after they’ve served their initial purposes.
Take the idea of lowering cost per lead. Without a connection to pipeline contribution, the measure becomes meaningless. If you were to buy 100 “leads” from companies in your TAM who weren’t actually in a buying cycle, their incremental value to you in the near term would essentially be zero. Yet that is exactly how many out there are doing it.
And the attribution methods many are using are certainly not helping. Though attribution may have been created in an effort to tune investment across a portfolio of tactical investment choices, it continues to lead to all kinds of organizational pathologies that get in the way of effective collaboration.
We’ve got different silos within marketing while marketing and sales fight over who’s going to get credit for creating a lead. What we should have is a team looking to gain a better share of the deals in our customer base and in our market.
If you’ve got constituencies within your marketing team or across marketing and sales actually competing with one another for credit, get people to look out at the market and the customer instead. If KPIs and attribution methods are hurting your ability to pursue demand, change them!
4. I say ‘potayto,’ you say ‘potahto’
How many of the marketing-qualified leads (MQLs) that you pass to sales are accepted? How many turn into sales-qualified leads (SQLs)? Let’s agree that neither of these numbers is as high as it could be and take a look closer at the components of some of those failures to convert.
How many are actually false positives? How many weren’t actually leads in the first place? And how many were false negatives — meaning they were real leads but something in your process caused someone to disqualify them for the wrong reason.
False positives are bad because they mean you’re wasting time and efforts of colleagues downstream of marketing. False negatives are bad because your colleagues are throwing away the value you’ve worked so hard to uncover. Start solving this problem by doing a few false negative/false positive analyses to establish which are the biggest problems for you. Then get to work on making them go away.
Reducing false positives
To attack false positives, consider adjusting what you send as a “lead package.” Consider adding in information about other contacts at the same company that you know are active but not yet qualified.
Consider including the names of key influencers around this nascent deal. Include as much behavior as you can. These are all areas that purchase intent data providers can help you with. I’d caution against simply holding back leads to “nurture” them more, as this can easily cause them to “age out,” meaning by the time you hand them over, sales no longer has a chance to influence the deal.
Reducing false negatives
Start addressing false negatives by making sure you’re aligned to sales’ account lists. Many organizations lack an easy way to deal with demand from accounts they aren’t set up to pursue or serve, so it makes sense to concentrate most on what you know they’re prepared to deal with: the sales organization’s current ideal customer profile (ICP) definition and their current account assignment and coverage strategies. If you can, open a dialogue on what really should be done with accounts that should but don’t fit into the currently operating coverage model.
Next, start thinking about how you can wrap your leads with more information. Figure out ways that you can show and share what’s really going on in the account. One option is using my company’s Priority Engine solution. You can do some of this with Marketo’s ABM module. SiriusDecisions and their clients are doing really interesting things with SFDC and Dynamics around it. Engagio has a lot of good ideas, too.
5. SLAves to an ‘efficiency’ model
On the face of it, this is a simple one. It’s about what happens after a lead is accepted into a tele-qualifying organization that’s focused on efficiency and scale. If your tele-team is charged with making as many calls as they can, you’re likely killing demand. Their job is more about making the calls than it is about converting the leads (or, more accurately, the accounts they come from).
You need to change this. But until you get their internal KPIs adjusted, and from there, their service-level agreement (SLA) to management (and to you) adjusted, nothing can happen. You need to work with your tele-leaders to incorporate account-based effectiveness approaches. Showing them what’s really going on in the account will help.
Even better, if you can offer insights that will help them achieve effectiveness goals, they will see you as an extension of their success.
6. Second Lead Syndrome and the DUW
Related to both 5 and 6, Terry Flaherty’s “Second Lead Syndrome” describes the common situation in which companies, in an effort to reduce wasted time, systemically narrow their focus within follow-up.
In many organizations, when a lead comes onto their radar screen from an account, that lead becomes their sole focus within the account, to the exclusion of subsequent arrivals. If a second lead comes in, it gets dispositioned as “already working” or an equivalent status.
The problem with this is that this second lead may have nothing to do with the first one. It could be from a different department — a critical miss if your product sells at the departmental level. Or it could come from a different role or function — a critical miss if you sell different products to different use cases.
Second Lead Syndrome is one of the symptoms Terry was studying when he and Kerry Cunningham were developing the Demand Unit Waterfall (DUW). I think their DUW is especially helpful in thinking about how we can maximize demand identification and conversion within accounts we’ve already penetrated.
Simply put, you’ve got to map the potential demand for your solutions to how your target account is organized. From there, you need to adjust lead packaging and opportunity management concepts to (a) contain more information about the buying units in a company and (b) make it possible to manage multiple opportunity processes within a single account.