Good revenue, bad revenue and lead gen in B2B marketing

7th October 2018

My last post introduced an 8-step framework with which to develop our marketing plans. In this last post of the series, I turn my attention to the 3rd and final of my 3 enduring fallacies of B2B marketing – that the purpose of B2B marketing is lead generation.

 Not all revenue is good revenue in B2BPhoto by Patrick Hendry on Unsplash

 

Not all revenue is good revenue

And not all leads are good leads.

Not too long ago, I had a lively discussion with a very successful marketing director in a good size B2B who categorically stated that ‘marketing serves one core purpose, to feed sales’. They went on to say that it’s only through this lead generation activity that marketing can gain the respect of the business.

And I get it, we’re under so much pressure to deliver ‘value’ and demonstrate ‘results’. Yet do we actually have clarity on what that value is? Somewhere along the way we’ve become convinced that results mean leads – or even better – revenue.  I even know more than a few marketers who are actually signing up to revenue targets.

We are not salespeople!

And I would argue that the results we need to deliver are not always about leads or revenue. Especially in B2B, there’s often a conflict between salespeople’s motivations – immediate reward based on sales targets – and the needs of a business where long-term customer relationships are a priority.

Not all revenue is good revenue. Good revenue is profitable; it helps our organisations grow and is sustainable. Bad revenue drains our resources and diverts us away from revenue that is profitable. I’m sure we’ve all worked with customers who take up such an inordinate amount of our time – whether that be in servicing or hand-holding – that (if we measured these costs) they end up actually losing us money. And we’re all familiar with companies where revenue keeps growing but profits keep declining, operating at a loss year after year, until they finally fail.

Not all leads are created equal either. Have we as marketers ever actually looked at the cost of bringing in a lead? Probably not. And how many of us really consider customer lifetime value when we make our targeting decisions? I wonder.

 

What is the purpose of marketing in B2B?

If not lead generation, what is the purpose of marketing? I’ve been asked that question a lot over the course of my career, and not always in a friendly way.

Purpose is one of those words that’s been so overused it’s become almost meaningless. So, as I often do, I pulled out my trusty Oxford English Dictionary to remind myself of the actual meaning of the word:

the reason for which something is done or created or for which something exists(my emphasis)

Does marketing exist to generate leads? Sure, that’s one of marketing’s many tasks; but its core purpose? Not in my world.

Of course, lead generation is a necessary part of our role as marketers. Simply put, our organisations stay in business by acquiring customers who buy our products and services, at a profit, enabling our organisations to continue to thrive. But acquiring customers in B2B is most often a complex and lengthy process, with many people involved in decision-making. And I wonder how often we as marketers ever think about or look at the real impact or influence of those leads on delivering profitable revenue.

I also worry that we become so focused on acquiring those leads that we neglect all those other activities that are marketing’s responsibility and ultimately also enable growth – namely strategy, research, segmentation, positioning, awareness, and customer insight and engagement.

Lead generation is a tactically-focused, short-term marketing activity; and it is not a strategy. If we continue to focus on and define marketing by this alone, we are doing a disservice to ourselves, our profession, and the companies we work for.  We simply must broaden our thinking to encompass a clearer understanding of our wider role and purpose, and the impact we have as marketers.

 

The Three Stonecutters

Lead Generation in B2B

There’s a wonderful parable by an unknown author:

A traveller came across 3 stonecutters working in a quarry and asked what they were doing. The first stopped working and replied, “I’m making a living by cutting as many stones as I can.” The second kept on hammering while saying, “I’m doing the best job of stonecutting in the entire country.” The third looked up to the sky and said, “I’m building a cathedral.”

In the context of marketing:

  • the first stonecutter was focused simply on the completion of the task and the quantity of output;
  • the second stonecutter was also focused on the output, but with a quality dimension as compared to other stonecutters;
  • however, the third stonecutter saw beyond the task to what was being built, understanding the specific contribution to a larger outcome, a higher purpose.

Lead generation can then be understood as a task fulfilled by the first two stonecutters – a short-term activity, designed to meet quantity and quality quotas and standards, much like our SQLs and MQLs.

Yet the third stonecutter sees and understands the future that is being built, maintaining a focus on what is being achieved by their individual efforts. This is the clarity each of us – as individuals and as marketers – need to define and articulate.

Are we building a cathedral or are we fashioning stones? Are we delivering outputs or outcomes? And ultimately are we contributing to the long-term sustainability and value of the companies we work for?

 

Marketing purpose

There are many famous quotes by the business guru Peter Drucker but these are two that have stayed with me throughout my career:

“The aim of marketing is to understand your customer so well the product or service fits…and sells itself.”

“Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

There continues to be a lot of focus within our businesses on innovation (whether real or aspirational), but it is the final sentence of this quote that has been woefully neglected. And marketing as the unique function of a business encompasses the fundamental marketing building blocks of Brand, Strategy, Customers and Measurement:

  • Brand – build, maintain and protect the brand through awareness and positioning, creating credibility and trust within the marketplace.
  • Strategy – create the demand that drives growth through a customer-orientated approach that appropriately researches and segments the markets, articulates goals and objectives, and makes choices on where to focus marketing’s time, energy and resources.
  • Customers – deliver on-going customer insight and engagement so that we understand what really matters to our customers, deliver what’s relevant and of value to them and, of particular importance in B2B, continue to build and maintain those long-term relationships.
  • Measurement – measure marketing success by developing metrics that matter to the business not to ‘prove’ our value but to understand what works, what doesn’t and why, and thus to better inform what we do next.

Ultimately, our job as marketers is about delivering both value and growth; value for our customers, growth for our businesses.  And the reality is that lead generation on its own won’t ever provide that value or growth. The sooner we understand that, the sooner we can begin delivering on both the promise and purpose of marketing within our organisations.

****************

If you’d like to read more, check out my book B2B Marketing Strategy: differentiate, develop and deliver lasting customer engagement on my book page, and then buy it from Kogan Page publishers or Amazon everywhere.

B2B Marketing Strategy

 


Heidi Taylor is an award-winning senior marketing strategist with 25 years' experience of helping organisations engage with their customers, creating impact and differentiation. She is a sought-after speaker at marketing conferences in the UK and internationally, and regularly contributes articles to marketing journals in print and online. You can follow her on Twitter @TaylorMadeInKew.

Copyright © 2018 Heidi Taylor Marketing Ltd | Company registration number: 9916606 | All Rights Reserved Website Created by The Wow Factory