Why B2B tech firms need to stop focusing on generating leads

Stop focusing on leads 

Sounds counterintuitive, doesn’t it? Well let me clear something up straight away, we love leads, well qualified, good fit leads are great… when we get them. The problem comes when our marketing strategy is orientated around generating them, in fact the problem starts when we have a ‘marketing’ strategy at all. Let me explain.

If your B2B technology firm has a complex product, a relatively niche audience and your average deal size is measured at least in 10’s of thousands and you have a marketing strategy oriented around lead volumes then I suspect that right now you are finding three things:

1. That the number of enquiries you receive via your website isn’t sufficient to drive growth
2. That your sales team is working very hard to generate leads themselves to hit target
3. That the metrics being reported by your marketing team are going in the ‘right’ direction

So what does this actually mean?

In a nutshell, it means you have the wrong strategy, sorry. In 2021 (and indeed for sometime before this) having a separation between your sales and marketing teams and their individual sets of metrics is a relic of a bygone age.

Sales and marketing in the aforementioned type of business should be one harmonious team, we hear a lot about sales and marketing alignment, well the time to get aligned is now and whilst it pains me to say this as a career marketer the ones that are furthest out of alignment are marketing.

Sales, marketing and indeed service teams need to align around a common goal - growth and cast out the biggest contributor to poor performance - vanity metrics. 

Vanity metrics have been around for as long as marketing and sadly they are driven in the main by the very people who are supposed to own the vision for growth - the C-Suite. Senior managers are taught two truths from their first days as recent graduates and demand that they are adhered to by all departments. They are:

1. That ‘good’ charts go up and to the right
2. That more = better

If what you are measuring is profit, then this is indisputable, but beyond this, the case gets a bit shaky. We’ll look at a few of the worst offenders in a moment, but first to introduce the third player in this trifecta of disappointment and perhaps the biggest sacred cow in the world of sales and marketing - the funnel [cue old movie villain music].

The funnel and its close associate conversion rates are the drivers of most vanity metrics and indeed the reason that we don’t focus enough on growth from within our existing client base (but I’ll save that for another blog). The funnel is predicated on the principle that prospects enter into the top in vast numbers and slowly get whittled down until a buyer plops out of the bottom, which is when the marketing and selling stop. 

We are of course told that our job as marketers and salespeople is to measure our conversion rates from one stage of the funnel to the next and ideally improve upon them. The next ‘logical’ step is of course to then work up from the desired result. If our goal is to generate a £1m of revenue say, then first we look at our average deal size, perhaps this was £50k, so we need 20 deals. Let’s look at an example conversion funnel.

Very quickly the funnel starts not to make sense in the context of a business with a niche market for a specialist technology solution. Are there really 20,000 people a month who are somewhere on a buying journey with the power to influence a decision? For most businesses of this nature sadly the answer is no. 

For most people this fact is obvious, but because they are trapped within the paradigm of lead generation then the solution becomes to start slicing up the pie, sales will generate x%, the account team y%, the universe will deliver z% until our funnel looks somewhat more achievable. The budgets get submitted and the time comes to strap in, hope, and for the smart ones to start yet another CRO project.

This is where the vanity metrics kick in a big way. As a marketer operating within the lead generation paradigm justifying your existence is of paramount importance, your charts need to go up and to the right and ideally we need lots of charts doing this to drown out the noise from annoying little numbers like ‘revenue attributed to marketing’. 

What is required are activity metrics! Impressions, Clicks, CTR, CPC, Open Rate, Click Rate, Web Traffic, MQLs and plenty of them, nice big quantities to hide behind so that when the going gets tough, we have a defensive position of ‘Look at all this opportunity we have created that sales have done nothing with!’ and so the merry dance continues.

The solution 

So what’s the solution then if you’re so f$%@ing smart I hear you cry!

Well, the solution is actually quite simple and can be summarised as: stop focusing on quantity and start focusing on quality. 

Underneath this there are four core principles to adhere to:

1. Sales and Marketing need to become one department 
2. Together they need to stop caring about the total addressable market and start agreeing on a list of target accounts
3. They need to agree on a common scorecard that focuses on the depth of engagement amongst these target accounts, rather than volumes of interactions, be that sales calls or web traffic. 
4. Ultimately they need to unite around a common goal of proving to these target accounts that they are the best fit to meet their needs.

What I am describing of course is ABM or Account-Based Marketing and it is the number one strategy used by B2B technology companies for growing revenue. You can read more about ABM and how to get started in our Introduction to ABM eBook.

Staying on the theme of metrics, once you orientate your scorecard around quality of interactions it starts to look very different. The likelihood is that you will still track all of the same metrics as you did before, the difference is, for the first few months lots of them are going to tank. 

This will be scary, particularly for your C-Suite. But keep the faith and more importantly, keep theirs, because in a shift from the paradigm of ‘more = better’ to the less pithy ‘less is fine as long as they are the right people’ there will be some difficult questions asked and some lapses in faith, but reassure yourself that the results will come.

How can I be so sure? Well simple because that old adage ‘if it looks right it probably is right’ applies here big time. Consider this question: Where did most of your existing customers come from? If you are like most businesses they came from three places:

1. Existing relationships: Businesses or more correctly people in businesses that are contacts of your leadership team or in the little black books of your sales team.
2. Referrals: Your existing customers tell people they know how great you are or your partner network brings opportunities to you because they know how great you are.
3. Job moves: Your lovely client contacts that you have built great relationships with moving jobs and taking you with them.

What do these all have in common - relationships - in summary your business comes from people that know you, trust you, think what you do is a good fit to what they are looking for and finally that believe that you understand them and their business so are able to provide a solution based on in-depth knowledge of what they want to achieve.

ABM as a strategy is designed to replicate the conditions under which people already buy from you, it creates awareness, it works hard to build trust, it seeks to demonstrate good fit and it is rooted in a process of accruing as much understanding about individuals target businesses (accounts) as possible.

Let’s score the two approaches:

You can see that whilst traditional marketing is strong at the top of the funnel it falls away heavily at the crucial point where the relationship should be hotting up. 20 years ago this wasn’t a problem, buyers were less sophisticated, had little access to information and not much choice when it came to vendors. Their only option was to become a ‘lead’ and engage with a sales team to educate themselves. Now there is so much information online and so many vendors in the market that buyers are overwhelmed with options. Their defensive mechanism is to take back control and surround themselves with people and processes to stop them from being marketed and sold to. Rigorous purchasing driven RFI/RFP processes with chosen vendors, internal teams with their own trusted networks and so on.

Rest assured that changing your strategy to focus on quality, to focus on hyper-personalization, to focus on demonstrating that your business understands them and can help them win is changing your strategy to focus on the things that matter to prospects and that actually generate sales growth. It’s changing your strategy to focus on what you have already done to get to where you are and surely this makes sense.

If you need help getting started on that journey then why not get in touch with one of our team.