GROW CUSTOMERS THROUGH MARKETING AND SERVICES CONVERGENCE

In our multi-part blog series on organizational convergence, TSIA’s Phil Nanus and others have written extensively about the convergence of sales and services in an XaaS world. For a great primer on how these lines are blurring, be sure to read his blog post or Chapter 7 of the Technology-as-a-Service Playbook. A much less talked about topic, however, is the convergence of marketing and services, and their potential to work together to drive cost-effective leads and revenue from existing customers.

The Lowest Cost Lead Generation You’ll Ever See

According to HubSpot and other sources, the cost of an inbound marketing-generated B2B technology lead is between $50-100, with the median being just over $70. As stated in HubSpot’s 2014 “State of Inbound” report based on annual survey results, the cost of an outbound marketing generated B2B lead was $220.

Sales-generated leads are about the same cost, though getting there requires a little more math. The average compensation, including commission, for an inside sales rep is just under $50,000. That works out to about $200 per day. A good rep will make between 50-100 outbound communications per day. The hit rate for lead generation on cold calls is about 2%, and for email is about 4%. If you blend those together, you can stipulate that a productive rep can find 3 actionable leads per day (although I’ve run inside sales teams, and this estimate is probably a bit high). Even at that aggressive conversion rate, it comes out to around $67 per lead. Outsourced lead generation companies charge between $75-150 per qualified meeting they set up, so the numbers align.

A productive sales rep can find 3 actionable leads per day at around $67per lead.

Services-generated leads are much cheaper. In the course of their interactions with customers (which happen at a rate at least 10x that of sales), your services delivery teams will come across new opportunities with your customer base. TSIA Expand Selling provides the frameworks, coaching, and research necessary to safely convert these touchpoints into actionable sales leads without compromising the core mission of services or their status as trusted advisor.

Services-generated leads are much cheaper. In the course of their interactions with customers (which happen at a rate at least 10x that of sales), your services delivery teams will come across new opportunities with your customer base.

The total time-per-lead-generated by a services rep is around 20 minutes on average. That includes the time talking to the customer about the opportunity and time spent inputting the lead into the CRM or other system they use for tracking. The average US salary for a support engineer is around $70k, or $35 per hour. If it takes 20 minutes to take a lead, that’s $11.67 per lead, or between 7-22x less expensive than other sources.

An important note: that number does not represent a hard cost for these services-generated leads, but rather only an opportunity cost. Meaning, the call is going to happen anyway, and this is just 20 minutes of time that the rep isn’t spending on another call. Plus, the customer is actually paying for the call where the lead is taken. Depending on how you approach the accounting, the incremental cost of these leads may be even less, because there is little-to-no cash out of pocket being spent.

Who Informs the Buyer?

Marketing and services are coming together in more areas than just lead generation. The marketing function has advanced deeper and deeper into the sales cycle over the last 20 years. Prior to the internet age, customers might have gotten a direct mail piece or would stop by a trade show booth, but the vast majority of the information they needed to make a purchase came from, and was controlled by, salespeople. As the dot-com era dawned, it became easier and easier to research information about technology offerings and their sellers. In the social media era, prospects can easily connect with people who are already deep into their implementations, read candid reviews, and ask their peers the questions they previously might have asked a salesperson. If the services teams can’t get customers to adopt their technology or realize the value they seek, prospects will find out. Customer success becomes key to customer acquisition.

 

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Freemium Models: Where Services Enter the Picture

In the world of XaaS, easy adoption and lack of friction allow potential customers to use and purchase software without ever interacting with a salesperson. This freemium model has led to a situation where the services team, usually customer support, may be the first human contact the customer has with your company. It becomes the job of services to not only inform and help the customer, but to also tee up the sales team to sell value-add services or enterprise-wide licenses—in other words, the traditional role of marketing. Services, sales, and marketing must all work together to inform the customer and make sure the initial adoption of the technologyleads to bigger and better things for both the customer and the seller.

Discover More About Lead Generation Through Services Touchpoints: Take This Important Survey

Given these remarkable opportunities, it’s critical that marketing and services have to be on the same page. TSIA member companies who utilize their services teams to generate sales leads with existing customers are generating tens of millions of dollars in qualified pipeline. They are doing so without compromising the core mission of services as trusted advisor or seeing decreases in their core metrics. This survey will capture the key performance indicators associated with lead generation through services touchpoints, and examine the associated practices that lead to success. Anyone who participates will have access to the useful results. Click here to take the survey and contribute to TSIA research.

Read more posts in the "TSIA Organizational Convergence" blog series:

• "The Year of Convergence"
• "The Converging World of Managed Services"
• "Services Convergence and PS: What's to Become of the 'O' in PSO?"
• "Knowledge Management Convergence: Overcoming Barriers to Knowledge Sharing"
• "3 Examples of Customer Success Convergence"

 

Post Date: March 16, 2017

https://www.tsia.com/blog/grow-customers-through-marketing-and-services-convergence

NOW MORE THAN EVER, HELPING WILL SELL, BUT SELLING WON’T HELP

Sales and Customer Success executives are under pressure to hit their bookings targets, even as the COVID-19 crisis is causing their customers to slow or halt their discretionary spending. They also face the question of how hard to push their customers to make or renew their purchases, wrestling with both economic and human issues. Perhaps the answer lies in one of TSIA’s core beliefs: Helping will sell. Selling won’t help.

In our conversations with TSIA member companies dealing with the COVID-19 crisis, certain best practices are beginning to emerge. This post is the second of a series called “The COVID-19 To-Do List for Revenue Leaders,” and will compile and present some of the top insights from TSIA researchers and members, as they deal with the problems of the moment, and look to emerge stronger on the other side.

The Big Thing: Helping Will Sell, Selling Won’t Help

At TSIA, “helping will sell, selling won’t help” is more than just a clever phrase. We have argued for years that Sales can be the natural outcome of helping the customer solve their problems. And right now, your customers are having problems the likes of which they’ve never seen before. The first reaction of your Sales, Services, and Customer Success teams should be to empathize and do everything they can to help the customer deal with their current crises.

However, if you do indeed know that a customer needs help, and you have an offering that can help them, then getting them what they need to solve the problem is the correct course of action, even if that means they need to spend more money. If your support cases indicate, for example, that the customer is struggling with capacity, or they have not configured their implementation correctly, then it is NOT inappropriate for you to sell them something that will solve their problem. In fact, it’s the right course of action.

That doesn’t mean it’s time to be opportunistic. And your communications to your customers need to be very, very focused on their interests rather than your own. However, if you have an offering that can truly help the customer address their immediate needs, then it is the correct course of action to make sure the customer knows about it and that you can partner with them to address their challenges. Help the customer, no matter what form of help that may take. You would want them to do the same for you.

3 Ways You Can Help

Here are three ways you can put “Helping will sell, selling won’t help” into practice:

1. Refocus resources to market segments scrambling to deal with the crisis.

As TSIA speaks to its member companies through research and interviews, they’ve consistently told us that they are busier than ever. This seems counterintuitive, as much of the global economy has screeched to a halt. However, certain segments of the market are not only still spending, but are desperately in need of help and are looking for not only your offerings, but for your guidance as subject-matter experts in your market segment.

Anyone who is trying to deploy and support remote workplaces is seeing overwhelming demand. Your company’s Sales and Delivery teams who are focused on healthcare and government sectors are likely overwhelmed with requests to increase capacity. 

Consider redeploying your sales, customer success, and delivery resources to these critical areas of need, even if it means shelving or postponing existing projects. Your other customers are likely to understand and empathize if you’re focusing your efforts on these critical customers who are helping everyone and on the front lines of the crisis.

2. Support your channel partners and ecosystem.

As much pressure as this crisis will put on your own business models and infrastructure, it will be even more detrimental to many of your channel partners. Channel partners typically have less cash on hand, and it is critical that they can continue to deliver the value required by both you and your customers during this crisis. 

Ensuring channel partners have telemetry into the customers’ adoption progress, support tickets, and renewal schedule is critical to their success in continuing to keep business functioning and keep your channel healthy. XaaS and cloud computing give the technology vendor tremendous insight into what’s happening with the customer, but if this information isn’t shared with the partner, they don’t know what next steps to take with the customer. This is a critical oversight, as they may be the best party to roll up their sleeves and help in a crisis due to their local proximity and familiarity with the customer.

Create an engagement model to regularly and openly communicate with your partners 24/7. Lay the groundwork to establish a regular and sustainable communication cadence with them with an avenue for feedback. Partners will value and invest in the vendors who take the time to engage and communicate with them. Keeping relationships healthy and having an attitude of service toward your channel partners will serve vendors well in the post-crisis world.

3. Engage services in the sales process.

At TSIA, we often use the term “touchpoint calculus” to illustrate the fact that your services professionals and Customer Success Managers interact with your customers at a rate 5 to 15 times as often as your sales team. If you’re going to grow revenue efficiently in any XaaS or services environment, you simply have to leverage these interactions to find and package new opportunities with existing customers. In fact, it’s clear that companies who engage basic sales motions with services and customer success grow their customers dramatically faster than those who do not.

During this crisis, your services people will play an even greater role in customer outreach, and will be the first line of communication. They will be able to uncover all kinds of qualified pipeline, if you have the infrastructure in place to help them do it. So, how can services and customer success teams safely help sales without compromising their status as trusted advisors? TSIA offers this primer on “Engaging Services and Customer Success in the Sales Process.”

TSIA is Here for You

We understand that our member companies, the technology industry, and the world at large have been impacted by COVID-19. Now, more than ever, we need to work together to get through these challenging times. TSIA is committed to providing visibility as quickly as possible into the changing industry trends and practices that come as a result of COVID-19. Visit our Rapid Research Response Initiative resource page for more information.

7 STEPS TO $7 LEADS: GENERATING COST-EFFECTIVE B2B OPPORTUNITIES THROUGH SERVICES

At most technology companies, Services teams interact with customers at a rate of 5-15 times as often as their Sales counterparts. TSIA member companies are utilizing expand selling best practices to leverage these interactions to generate hundreds of millions of dollars in qualified upsell and cross-sell opportunities with their existing customers.  

This past spring, TSIA launched an in-depth survey on the practice of generating leads through Services touchpoints. It was the first study to go into depth around the practices and key metrics that are most tightly connected with success in this effort. While the specific findings of the survey are only available to TSIA members, I’d like to share one of the more interesting pieces of information that came to light from the survey data. We discovered how remarkably low-cost these Services-generated leads are. In the hopes of helping companies like yours understand what an incredible opportunity there is to be had in this area, we’re making this cost-of-lead data public. 

A Look at the Cost of Leads from Other Sources

HubSpot and other marketing platforms estimate that a lead generated by inbound marketing channels, whether a blog post or other activity that drives an inquiry, costs between $70-110 per qualified B2B lead. The cost of generating a lead through outbound marketing, whether through CPC advertising, direct mailings, or other outreach, is as high as $220 per lead.

Similar costs are incurred for lead generation by Sales Development reps. In general, a prospect will pick up the phone on one out of every 10 cold calls, and about 2 of those 10 will result in a lead, giving them about a 2% hit rate overall. If you take the total number of leads that a rep generates, and arbitrage that number against their total compensation and time spent on lead generation, the number likely will come out to roughly the same price as a marketing-generated lead.

 

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Sources: TSIA Lead Generation Through Services Survey, 2017 and HubSpot "State of Inbound Marketing 2015."

Not Just Cost-Effective, But Effective

In contrast, TSIA research shows that Services-generated leads are far more economical, and are perhaps the most cost-effective leads currently available in the B2B technology sector.

In our 2017 Lead Generation Through Services Survey, TSIA utilized the following method for calculating cost-per-lead: We looked at the time that a Services rep spent talking to the customer about a potential opportunity, then added the time that the Services rep spent inputting the lead into the system, usually into a custom screen that was connected to the CRM. If the company utilized any human curation or intervention between lead generation and passing to Sales, that time was factored in as well.

Services-generated sales leads are the most cost-effective leads available in the B2B technology sector.

Once the total time spent per lead was calculated, we applied the time against the TSIA-benchmarked US hourly rate of the services delivery rep in question. After performing this analysis, we found that the cost-per-lead fell anywhere between $6.70 for leads generated by Support Services and $73.80 for leads generated by Professional Services. The more relationship-based services teams, such as Customer Success, took slightly longer to discuss an average opportunity, whereas the fix-and-repair services delivery reps such as Field Services technicians or support engineers took less time to speak with the customer when generating leads. The latter, therefore, had a lower relative cost.

 

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Cost-per-lead by service organization Source: TSIA 2017 Lead Generation Through Services

Making Services-generated leads even more appealing is that there isn’t any out-of-pocket cashbeing spent in the process of creating these leads. The call or interaction with the Services rep is going to happen anyway. The time spent on lead generation is merely an opportunity cost—the time used to create an opportunity rather than moving on to the next case. In fact, if the customer is in a paid support or managed services contract, it can be argued that the customer is actually paying for the cost of the lead generation, driving the actual cost down to practically zero.

The leads that Services professionals generate turn into qualified opportunities over 50% of the time, and 20-27% of them result in closed deals. That compares favorably to marketing or inside sales leads. This indicates that services-generated leads aren’t just cost-effective, but effective.

How to Generate These Low-Cost Leads

If you’re interested in taking advantage of these Services interactions to generate leads with existing customers, TSIA recommends you take the following steps to get started. Far more detailed instructions are available to our members, in research such as the recently-published paper, “Getting Started with Expand Selling.”

Step 1: Set Well-Defined Boundaries and Achievable Goals for Your Pilot

Start with a services delivery group where you have full visibility into their success metrics and full control over their processes. As with any experiment, you need to solve for a minimal number of variables. Also, don’t expect millions of dollars in pipeline in the first 6 months. The purpose of the pilot is to prove that lead generation can work, and to see how it will be implemented in the best way for your company.

Step 2: Secure an Executive Sponsor

In nearly all cases where a pilot has been successful, the group running the pilot has secured the blessing and support of a member of the senior leadership team before beginning with the rollout. This will help you gain the cooperation of Sales, Sales Ops, Marketing and other functions that will be dealing with the leads after you generate them. There will be some rough spots as you get started, and an executive sponsor can help make sure all parties stick with it.

Step 3: Hand-Select a Volunteer Group

Chances are, there are people in your Services, Support, and Success organizations who are already having upsell and cross-sell conversations with your customers. These are the people you want to start with when you launch your pilot. And remember, lead generation should always be a voluntary activity. It is only done when taking a lead is directly in the best interest of the customer, and only after the problem at hand has been resolved.

Step 4: Be Flexible on the Metrics

For whatever group you select, make sure to give them some relief on their core metrics. If this is for Support Services, give them the extra leeway on time-per-call and grace on the number of cases resolved. If you are encouraging your Field Services or Professional Services teams to start taking on more upsell and cross-sell responsibilities, consider making these functions part of their direct hours. This will take much of the pressure off them to try this new experiment.

Step 5: Piggyback off of an Existing Process

Don’t create new systems or processes to start. Perhaps you have a dedicated Inside Sales team doing outreach and qualification who can have that first conversation to qualify the leads your Services teams uncover. Perhaps you can leverage your marketing team’s MQL process. Keep the initial effort as uncomplicated as you can, if for no other reason than you might have to do it over once you understand how things are actually working at your organization.

Step 6: Attack It and Track It

Expand selling pilots must be mercilessly tracked, and if you’re going to get permission and funding to grow the program, your data must be impeccable. Give yourself enough time and data points to make sure the data is sound, and again, keep as much of the pilot as possible under your own control.

Step 7: Recognize the Victories and Lay the Groundwork for an Expand Selling Culture

You should start to see the results of your program within about 6 months, though his time frame may vary depending on the length of your company’s typical sales cycle. In the meantime, make sure you’re tracking the first downs as well as the touchdowns. When a lead moves up the forecast into the qualified pipeline, make sure you report on that, and talk about the success in your team meetings and newsletters. Once other teams find out about the success your pilot group is having, there’s a good chance they’ll want to jump onto the bandwagon.

Learn More About Getting Low-Cost Leads and Expand Selling

TSIA’s Expand Selling line of research is aimed at bringing together the people, process, and technology required to drive cost-effective leads and revenue from existing customers. The full results of our Lead Generation survey are available to our members, who also have the ability to ask questions of the TSIA Research team, have access to webinars, and interact with others in the Expand Selling member community, where you can discuss best practices with companies who are facing similar challenges.

I go into more details on not only the cost of services-generated leads, but also the overall revenue potential in the white paper, “Generating $7 B2B Leads from Your Customer-Facing Teams,” available for download here. Also, if you’re interested in participating in TSIA’s latest survey around the upsell and cross-sell motion, please click here to be taken to the survey page.

 

Post Date: August 15, 2017