Holistic Revenue Management Moves Toward the Mainstream

Fundamental changes in the business environment have led a growing number of B2B companies to adopt new approaches for managing their revenue generating activities. While the specific approaches vary, they all arise from the recognition that successful revenue generation requires a combination of interdependent activities. Therefore, it's important to view such activities as components of a larger revenue generation process that must be managed holistically.

The need for a new approach to managing revenue generation and growth has been driven by the convergence of several competitive forces, including:

• The growing power and independence of business buyers enabled by an abundance of easily-accessible information
• The need to provide outstanding customer experiences at every touchpoint across the entire customer lifecycle
• The emergence of "as-a-service" and other types of subscription-based (or subscription-like) business models

Meanwhile, the leaders of most B2B companies are under persistent and growing pressures to produce organic revenue growth that is consistent, predictable, and sustainable. To meet this challenge, a growing number of B2B companies have changed how they manage the business activities and processes that impact revenue generation.

The Rise of the Chief Revenue Officer

Some companies have responded to the growth challenge by creating a new C-level position - usually called the chief revenue officer - to manage revenue generating activities. The specific duties of the chief revenue officer, and the scope of his or her authority vary across companies, but the CRO is usually tasked with managing most or all of the company's revenue-related functions. 

This would typically include marketing, sales/business development, direct outside sales, channel sales, and customer success/customer service. So, a high-level organizational chart for a typical CRO function would look something like the following:

Until recently, chief revenue officers have largely been a Silicon Valley phenomenon. Most of the early adopters of the CRO role were startup or early-stage SaaS companies. As far as I can tell, there are no reliable estimates of how many (and what kinds of) companies now have a CRO. However, a Google search yesterday - limited to the preceding year - produced about 68,000 results for the term "chief revenue officer." Most of the search results were announcements regarding the hiring of a first-time or new CRO, and most of these announcements were by technology companies.

It appears, therefore, that most CRO's can still be found in technology companies, although it also appears that the use of CRO's is beginning to expand beyond the technology sector.

Revenue Operations Teams

Some B2B companies have sought to address the growth and revenue management challenge by creating revenue operations teams. While this approach is still in its early stages, recent research suggests that the use of revenue operations teams is poised to grow.

Earlier this year, LeanData and Sales Hacker published the findings of The State of Revenue Ops 2018 study. This study consisted of a survey that produced 785 responses. About three out of four of the respondents (73.6%) were sales and marketing professionals, and about 60% were manager-level or higher.

In this study, only 22.4% of the respondents reported having a revenue operations team in their company, but an additional 15.2% said they are currently building one. Most respondents in this survey have a fairly clear picture of what revenue operations encompasses. About 45% defined revenue operations as "a unified alignment of marketing, sales, and customer success," and another 24.3% would add "operations" to the definition.

There was less consensus in the study regarding who should be primarily responsible for revenue operations success. When survey participants were asked who should "own" revenue operations metrics and key performance indicators, respondents provided a range of answers, as the following table shows:

Form Follows Function

The architect Louis Sullivan wrote that "form ever follows function," meaning that the shape of a building should be primarily based on its intended function or purpose. When companies create a chief revenue officer position or a revenue operations team, they are attempting to make the "shape" of their organization reflect the realities of modern revenue generation. Therefore, these approaches represent an important step in the right direction, and the use of both approaches is likely to grow.

Top image courtesy of Chris Potter (ccPixs.com) via Flickr CC.

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Why It Pays to Be Benevolent

B2B companies must be seen as trustworthy to earn the trust of prospects and customers. And science tells us that trustworthiness is based on ability, integrity, and benevolence. The rarest of these attributes is benevolence. This article explains why real benevolence is so uncommon, and what companies can gain by consistently practicing benevolence.

Trust lies at the heart of all business relationships. Most business leaders understand that trust plays a vital role in acquiring new customers and in maintaining strong relationships with existing customers. It's no coincidence that most companies aspire to be viewed as a "trusted advisor" by their customers and prospects.

Trust has been widely studied by psychologists and other social scientists, so we have a sound understanding of what creates a willingness to trust and how trust develops. Most social scientists agree that an individual's willingness to trust another person or an organization - and the level of trust that will develop - largely depends on the perceived trustworthiness of the other person or organization. Most scientists also agree that the trustworthiness of a person or organization is primarily based on three attributes - ability, integrity, and benevolence.

Therefore, the willingness of a potential buyer or an existing customer to trust a vendor depends on whether - and to what extent - the vendor exhibits these three antecedents of trustworthiness. In the trust context, ability and integrity mean what they normally do, but benevolence has a special meaning. The essence of benevolence is putting the interests of a person or organization above your own.

Ability, integrity, and benevolence are equally important for the development of trust, but benevolence is the most potent source of differentiation because it is the rarest of the three trustworthiness attributes. Benevolence is rare, not because most companies are intentionally "malevolent," but because the importance of benevolence is usually underappreciated, and because the non-stop need to grow revenues and otherwise improve business performance makes it harder for people in companies to practice benevolence on a consistent basis.

The Pressure to Perform

The constant pressure to grow revenues and improve business performance can undermine even the most sincere intentions to practice benevolence. Under these pressures, it's very easy to make small compromises on benevolence. But even fairly minor differences in behavior can have significant impacts on the perceptions of prospects and customers about benevolence.

Findings from the 2018 B2B Buying Disconnect study by TrustRadius strikingly illustrate this point. The TrustRadius research consisted of a survey that included responses from 438 B2B technology buyers. Only 23% of the surveyed buyers said their vendors were very influential in buying decisions.

The research revealed that trustworthiness was a distinguishing attribute of influential vendors, and that an aspect of benevolence played an important role in establishing trustworthiness. Fifty-six percent of the buyers who said their vendors were very influential also said their vendors were "very forthcoming about where the product works well and where it is not a good fit." Only 31% of the buyers with less influential vendors described their vendors in these terms.

About 40% of the surveyed buyers with less influential vendors said their vendors "did not proactively address the product's limitations, but did answer all of my questions." Taken together, these responses show that simply answering questions about product limitations isn't sufficient to produce the perception of benevolence that leads to a high level of trust and influence.

The Importance of Benevolence

Benevolence is also rare because its importance and value aren't fully appreciated. A 2016 survey of 2,400 consumers by MECLABS Institute (the research parent of MarketingSherpa) shows why benevolence is so important. For this study, MECLABS divided the survey participants into two equal groups. One group (the "satisfied customers") were asked to think about a company they were highly satisfied with when answering the survey questions. The other group (the "unsatisfied customers") were asked to think about a company they were very unsatisfied with.

When the unsatisfied customers were asked which of thirteen statements were true about their experience with the company, the most frequently selected statement was:  "The company does not put my needs and wants above its own business goals." In this survey, 60% of the satisfied customers said the company often or always puts their needs before its business goals, compared to only 16% of the unsatisfied customers.

This study also demonstrates how benevolence contributes to important and valuable business outcomes. MECLABS asked survey participants how likely they were to take several actions, and the following table shows the stark differences between the responses of satisfied vs. unsatisfied customers:

The MECLABS study shows that the "value chain" of benevolence works like this:  Benevolence contributes to a perception of trustworthiness, which enhances the development of trust. And trust contributes to a higher level of customer satisfaction, which leads to improved business outcomes.

So, practicing benevolence isn't only "the right thing to do," it's also a powerful driver of business performance.

Top image courtesy of Terry Johnston via Flickr CC.

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Surprise! Millennials Actually Like (Some) Marketing Mail

Millennials - usually defined as individuals born from about 1981 through about 1997 - are on the cusp of becoming the largest generational cohort in the U.S. population, and they are already the largest component in the U.S. labor force. Several recent research studies have found that Millennials are now playing significant roles in B2B purchase decisions. Therefore, we are witnessing a generational shift in B2B buying.

Some B2B marketing pundits have argued that Millennial buyers have distinctive characteristics that require different marketing and sales methods and tactics. One recent research report emphatically stated that "the Millennial buyer is impacting the entire buying journey and the old marketing and sales tactics won't work."

In reality, however, many of the claims made about the attitudes of Millennials are greatly oversimplified or just plain wrong. The global research Ipsos has characterized Millennials as "the most carelessly described group we've ever looked at."

In a detailed analysis of Millennial attitudes and behaviors published last year, Ipsos wrote, "Myths and misunderstandings [about Millennials] abound, with bad research jumping to general conclusions based on shallow caricatures about a group that makes up 23% of the population."

Clearly, B2B marketing and sales professionals must recognize that Millennials have become active participants in the B2B buying process, and they must be prepared to engage Millennial buyers on their terms. But to develop and execute effective tactics and programs, marketing and sales leaders need an accurate picture of the attitudes and preferences of Millennials, not "shallow caricatures."

One of the most pervasive ideas about Millennials in general - and about Millennial B2B buyers - is that they are digital addicts who prefer to do everything online, and who view other means of communication with disdain. Recent research has shown that this "digital only" view simply isn't accurate, and now a new study has found that Millennials actually like "snail mail" more than is commonly believed.

Millennials and the Mail discusses the findings of research conducted by the U.S. Postal Service Office of Inspector General ("OIG"). The research report is based on two surveys:

• The 2017 Postal Omnibus Survey - A nationally representative survey conducted in the summer of 2017 that produced 3,391 responses from U.S. residents, including 1,130 responses from Millennials.
• The 2018 Millennials Survey - An online survey of 2,497 Millennials conducted in April 2018 that targeted a nationally representative sample of 18 to 34-year-old U.S. residents.

In addition to the surveys, OIG hosted a moderated online discussion board in February 2018 that engaged 69 Millennial participants in an in-depth conversation about several mail-related issues.

Some of the findings of this research reinforce common perceptions about Millennials. For example, OIG found that Millennials receive fewer mail pieces, and pick up and review their mail less frequently than older generations. The research also found that Millennials have a strong preferrence for receiving and paying bills online. 

Other findings, however, show that Millennials have positive feelings about postal mail. Three out of four Millennials, for example, said that receiving personal mail makes them feel special. 

Millennials also like (and respond to) "marketing mail" more than is commonly believed. In the OIG research, 62% of Millennials said they had visited a store in the past month based on information received in the mail, compared to 55% of GenX respondents, and 52% of Baby Boomers. In addition, more than six out of ten Millennials said they like receiving coupons through the mail from restaurants and other retail businesses, and more than half said they like receiving mailed ads from such businesses.

The findings of the OIG research demonstrate that the attitudes and preferences of Millennials are more nuanced than is generally believed. And while this research focused on the attitudes of Millennials as consumers, it's likely that Millennials will exhibit similar attitudes and preferences when they're acting as B2B buyers. The important lesson here is that B2B marketers shouldn't rule out the use of direct mail just because they're marketing to Millennials.

One final thought. When reviewing any research study, it's important to consider the potential self-interest of the organization that conducted or sponsored the research. Therefore, I would normally be at least a little skeptical about research regarding the popularity of mail that was conducted by an arm of the Postal Service. In this case, however, the OIG appears to have followed market research best practices when designing and executing this study. You can find a detailed description of the research methodology in the Appendices of the research report.

Image courtesy of Kate Ter Haar via Flicker CC.

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Strategic and Agile Marketing - Better Together

Earlier this summer, Samuel Scott created quite a stir when he wrote an article for The Drum arguing that agile marketing is a "crutch for those who do not have a real strategy."

Samuel made several points in his article, but his primary argument was that most marketing channels and tactics do not and should not change all that frequently. Therefore, an agile marketing methodology is both unnecessary and inappropriate for many marketing activities. He contended that "strategy is paramount" and that many agile marketing ideas are "nothing but myopic short-termism."

Samuel wrote:  "But brands that insist on being 'agile' and changing short-term tactics all the time will only lose money . . . Say that you do 'agile marketing' and test various tactics and channels all the time. If it takes several months to determine what works best, it will have wasted time and money. A good strategy would have determined what to do at the beginning."

Scott Brinker responded to Samuel's article in a post at his Chief Marketing Technologist Blog. In his post, Scott argued that agile marketing - when done properly - is an instrument of strategy, not a replacement for strategy.

Scott described the basic rationale for agile marketing as follows:

"Agile management is a way to execute a strategy when either (a) the environment in which you're operating is fluid and shifting, and you want to rapidly sense and respond to those changes, or (b) the media in which you're rendering your strategy is malleable and has fast feedback loops . . . giving you the valuable option to iteratively optimize your execution quickly and cheaply."

He contended that "when agile methods are connected to and governed by a clear strategy, agile optimizes the operational reality of that strategy beautifully."

Frankly, I haven't seen much evidence that marketers believe the adoption of agile marketing eliminates the need for a sound marketing strategy. The idea that agile marketing makes marketing strategy unnecessary reflects a fundamental misunderstanding of what agile marketing is about.

At the most basic and practical level, agile marketing is about organizing and managing the work activities of marketing personnel and teams. As Andrea Fryrear, the President of AgileSherpas, recently put it, "Agile marketing is the deliberate, long-term application of a specific Agile methodology to manage and improve the way a marketing team gets work done."

This focus on improving the way marketing work "gets done" can be seen in the results of the 1st Annual State of Agile Marketing Report published earlier this year by AgileSherpas and Kapost. In this study, survey participants were asked to identify the most important reasons for adopting Agile in their marketing department. The following table shows the top five reasons selected by survey respondents:

Notice that most of these top reasons relate to improving the productivity of marketing work.

Study participants were also asked to identify the benefits their marketing department had realized from using agile marketing. The following table shows the top five benefits selected by survey respondents:

Again, most of the top benefits identified by the survey respondents relate to the improvement of work activities and processes.

Marketing success in today's complex business environment requires both a sound marketing strategy and agile marketing operations. But maintaining a high level of strategic alignment while simultaneously providing front-line marketing teams the necessary flexibility to adapt and respond quickly to rapidly changing market conditions can be a daunting challenge for marketing leaders. In a future post, I'll describe an effective way to meet this challenge.

Top image courtesy of velkr0 via Flickr CC.

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Written Content Still Matters in B2B Marketing

Unless you've been completely off the grid for the past several years, you're well aware that the popularity of video content has exploded. eMarketer recently estimated that U.S. adults now spend over an hour per day watching videos on digital devices. Omnicore has reported that in early 2018, YouTube had 1.57 billion monthly active users who watched over 5 billion videos every day.

Video Marketing is Mainstream

Research shows that marketers have embraced the use of video content. In a 2017 survey by Wyzowl, 81% of marketers said they were using video as a marketing tool, and two-thirds (65%) of the marketers who weren't already using video said they intended to start using it this year. In the 2018 content marketing survey by the Content Marketing Institute and MarketingProfs, 72% of B2B marketers said they are using video for content marketing purposes.

Given the widespread popularity of video content, some B2B marketers may be tempted to conclude that video is the future of marketing content, and that written content has lost much of its effectiveness. That would be a mistake, and here's why.

Written Content Still Matters

The reality is, written content remains a highly effective B2B marketing tool, and numerous studies have shown that a large majority of B2B buyers still prefer written content for many purposes. For example, in a recent survey of business executives by Grist, the three most preferred content formats were:

1. Short articles (800 words)
2. Blog posts (300-500 words)
3. Feature articles (1,200+ words)

Twenty-eight percent of the respondents in this survey also indicated a preference for long-form written content such as white papers, research reports, and ebooks. Only 26% of the respondents said they prefer video content.

In the 2018 content preferences survey by Demand Gen Report, survey participants were asked to select the types of content they find most valuable during the early, mid, and late stages of the buying process. Across all three stages, respondents identified thirteen types of valuable content, and all but three were text-based formats.

The Psychology of Content Preference

Basic principles of human psychology explain why we find video content so appealing and also why we prefer written content in many circumstances. Psychologists say the human brain processes visual information about 60,000 times faster than textual information. Therefore, watching videos requires little cognitive effort.

Reading, on the other hand, requires the brain to expend more cognitive energy. When we read, our brains must actively create thoughts about the content. It requires the production of an "inner voice" that enhances our attention. So, reading requires a longer attention span and more brainpower than watching a video.

Human beings are hardwired to avoid cognitive strain, and this means we are predisposed to prefer information that's easy to process. This is one reason we find video content so appealing.

But our mental "laziness" only creates a predisposition, not a hard and fast rule. In some circumstances, people will prefer information in a form that requires a considerable amount of cognitive energy to process. This explains why B2B buyers still prefer written content even though it requires more mental energy to consume. 

The key for B2B marketers is to understand when and why a potential buyer will sometimes find video content appealing, and at other times will favor written content.

Written Content Appeals to Goal-Oriented Buyers

The preference for video or text-based content is greatly influenced by what a potential buyer is trying to accomplish. Some buyers encounter content when they are focused on achieving a specific goal by consuming the content. Others encounter content when they don't have a specific goal in mind. They may be mildly interested in a topic, but they don't have a pressing need to learn about it in detail.

A recent analysis of website viewing behavior by Clicktale found that goal-oriented visitors tend to prefer text-based content, while less-focused "browsers" are more attracted to videos and colorful images.

This means that video content may be more effective with potential buyers who are not in an active buying process and those who are engaged in what I have called casual learning. However, text-based content is likely to be more effective with potential buyers who are focused on learning about a business issue or challenge and possible solutions.

Most goal-oriented buyers prefer text-based content because it is more suitable than video content for addressing complex topics and communicating detailed or technical information. This is an important consideration for B2B marketers since many B2B products and services are complex offerings.

Goal-oriented buyers also tend to prefer text-based content because it enables them to easily control their interaction with the content. Buyers can skim over portions that don't interest them, stop reading to make notes, and go back to re-read portions that are particularly interesting or require additional attention to absorb. With written content, potential buyers can interact with the content at their own pace.

Bottom Line

The bottom line is that both video and written content are important for B2B marketing success. Video content can be a powerful tool for capturing the attention of potential buyers, while written content excels at meeting the needs and preferences of more focused, goal-oriented buyers.

Image courtesy of Mehmet Pinarci via Flickr CC.

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The Right (and Wrong) Way to Listen to Customers

"If I had asked my customers what they wanted, they would have said a faster horse."

Henry Ford (Attributed)

"We don't ask consumers what they want. They don't know. Instead we apply our brain power to what they need, and will want, and make sure we're there, ready."

Akio Morita, Co-Founder of Sony

Dozens of books and articles have been written about the importance of listening to customers. Providing great customer experiences has become a top strategic priority for many companies, and listening to the "voice of the customer" is widely seen as an essential ingredient in the recipe for customer experience success.

Marketing often has the primary responsibility for gathering, analyzing, and developing actionable insights from customer inputs. So it's important for marketers to understand that listening to customers in the right way is undeniably valuable, while listening in the wrong ways or for the wrong reasons is a bad idea.

Companies frequently seek customer input in order to design and develop products or services that will be attractive in a given market. However, many companies still struggle to launch new solutions that gain traction with potential buyers. Of course, a new product or service can fail because a company hasn't listened enough to its customers. But failures also occur because companies listen to customers in the wrong ways.

In a common scenario, companies ask their customers what they want and encourage them to describe specific product or service features that would be desirable. The problem is, most customers aren't well suited to perform this task.

Most customers have a limited frame of reference. Like all humans, most of what they know is based on their past experiences. This means that customers can usually do a good job of describing what they want when they're asked about familiar products or services. But when they're asked to imagine or describe new product or service features or capabilities, their input isn't as helpful.

The cause of the problem is a cognitive bias that psychologists call functional fixedness. This bias refers to the natural human tendency to perceive objects only in terms of their typical or normal functions. Functional fixedness can be useful in everyday life, but it can also stifle creative thinking and prevent people from seeing alternative solutions to problems.

Functional fixedness causes people to fixate on the features and attributes that a product usually possesses, and this makes it difficult for them to imagine what new features or capabilities would make a product or service more useful and valuable. In short, most customers have difficulty describing product or service features or capabilities they've never experienced.

As a result, they often describe features or functions that will offer only modest or incremental improvements over whatever already exists. When a company relies solely on this type of input, it can miss opportunities to develop breakthrough innovations that customers would find extremely attractive.

The key to listening to customers the right way is to shift the focus from specific product or service features or functionality to what customers are trying to accomplish - to the "jobs" they are trying to get done. Customers may not be particularly adept at describing specific solutions, but with a little encouragement, they can usually provide a good description of what they are trying to accomplish and what problems or frustrations they are facing.

Focusing customer input on desired outcomes enables you to better understand what customers will really value, and this helps you design solutions that customers will be anxious to buy. So by all means, don't stop listening to your customers. Just be sure you are listening in the right way.

Image courtesy of frontriver via Flickr CC.

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Original Research Powers Compelling Thought Leadership

It's now clear that thought leadership content is having a major impact on B2B buying decisions. Several recent studies have confirmed that business buyers are consuming more thought leadership content, and that thought leadership affects decisions at every stage of the buying process. However, many of the same studies have also found that business buyers are becoming more selective about the thought leadership content they consume.

The reality is, thought leadership is a classic double-edged sword. Great thought leadership makes a significant positive impact on potential buyers, but poor thought leadership can have a major negative impact on a company's demand generation performance. In a recent survey by Edelman and LinkedIn, over a third of C-level respondents (35%) said that a company's poor thought leadership content had directly led them not to do business with the company.

Thought leadership marketing is challenging because buyers have high standards for thought leadership content. In a survey by The Economist Group, business executives were asked why they consume thought leadership content. The top reason chosen was to encounter thoughts that go beyond current thinking. When the executives were asked what qualities make thought leadership compelling, the most popular attributes identified were innovative, big picture, transformative, and credible.

In a recent survey by Grist, senior executives were asked what qualities were most valuable in thought leadership content. The three most favored attributes identified by survey respondents were fresh thinking, forward-thinking, and evidence-led.

These high buyer standards mean that effective thought leadership content must provide buyers with information and insights that they cannot get from other sources. But developing such content on a consistent basis is challenging for most companies.

One of the most potent and reliable sources for compelling thought leadership content is original research, and a new study by Buzzsumo and Mantis Research indicates that original research is becoming an integral part of the marketing mix at many B2B companies.

This study consisted of a global survey that produced 698 responses from marketers. More than half of the respondents (53%) were affiliated with B2B companies, and another 26% worked for hybrid B2B/B2C companies. The focus of this survey was to understand how companies are developing and using original research in their marketing efforts.

In this study, nearly half of the respondents (47%) said their marketing team had created and published original research in the previous twelve months. The study also found that B2B marketers were significantly more likely to have used original research than B2C marketers (50% vs. 35%).

Most of the respondents who had used original research were satisfied with the results. Over half (56%) said their research had met or exceeded most or all of their expectations. Given this level of satisfaction, it's not surprising that nine out of ten of the respondents who are using research plan to conduct additional research in the coming twelve months.

The Buzzsumo/Mantis Research study also suggests that the use of original research is poised to increase. Half of the survey respondents who are not currently using original research said they are considering adding original research to their marketing efforts in the coming twelve months.

Finally, large majorities of the survey respondents in this study indicated that original research provides important support for their content marketing programs. Seventy percent of the respondents said that original research produces more content/editorial ideas, and 67% said it produces higher quality content/editorial ideas.

When reviewing any survey, it's important to consider how the demographics of the respondents may affect the survey results. In the Buzzsumo/Mantis Research survey, nearly two-thirds of the respondents (65%) worked for advertising or marketing agencies, technology companies, and professional services/consulting firms.

In my experience, these types of organizations tend to be relatively heavy users of original research. Therefore, this survey may somewhat overstate the use of original research in the overall population of companies. That being said, there's no doubt that original research is becoming increasingly important as source material for compelling thought leadership content.

Image courtesy of Thomas Haynie (www.phlebotomytech.org) via Flickr CC.

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