Elevation: From Thought Leadership to Market Leadership

Showing Them the Money

"The New Paradigm."

That's how Philip Kotler, the 77 year-old pioneer of marketing theory, described it.Decked out in suspenders and a black cap, he was referring to the ideas in a recently published book called Value Merchants.

I took Kotler's presence in the audience at this relatively intimate conference in Tampa as confirmation that I had invested my time wisely. And I wasn't disappointed.

The event, put on by Penn State University's Institute for the Study of Business Markets (ISBM), brought together a compelling group of marketing and sales leaders as well as consultants and academics to explore some of the top issues now facing companies that sell B2B.

The conference showcased the ideas in the book, which was written by James Anderson, Nirmalya Kumar and James Narus. As I've written in a previous post, they make the case for "customer value management" -- a discipline that revolves around "demonstrating and documenting superior value." As they see it, this is the key to differentiating one's company in today's hyper-competitive markets while ensuring "an equitable return on the value delivered."

The alternative? Sales people that sell on price or give away the farm. They become "value spendthrifts" instead of "value merchants" -- all because they have no clear idea of how to position and price the value they have to offer.   

As James Anderson noted in his opening keynote, suppliers are now challenged to translate the benefits of an offering and show  what it is worth to a customer. They must confront the demand for price concessions brought on by 1) a reduction in purchasing staffs; 2) an increase in their purchasing responsibility; and 3) a reduction in their time and knowledge available to make smart procurement decisions. The supplier is challenged to ensure the customer can clearly see and measure the value of making a choice that goes beyond mere price.

While at least one consultant said to me that the ideas discussed at the event have been floating around for thirty years, I am inclined to believe that the authors of Value Merchants have truly broken new ground in the elegant and accessible way they present their ideas. They've transcended so much of the blather I've come across in recent years that focuses on solution selling or consultative selling. They've recognized the issues are about much more than selling. They are systematic and cultural. Is "value" in your company's DNA? If so, how do you prove that you are delivering it?

That turns out to be more difficult than it sounds. Many of the larger companies that have advanced value management capabilities have spent years and invested big sums to develop them. But now they are differentiating themselves in their industries -- in markets (such as pumps and bearings and industrial chemicals) that some might consider fully mature.  What these companies are demonstrating is there are no true commodities -- only an absence of imagination.   

The case studies at the event were truly compelling:

• SKF Group -- This $4.4 billion maker and marketer of bearings, seals and lubrication systems has introduced what it calls the "documented solutions program" to sell high-value offerings. Punching up his presentation with the unforgettable "show me the money" clip from Jerry McGuire, Todd Snelgrove, global manager, customer value, went on to show that his company was up to this customer challenge. Sales engineers now expertly demonstrate the "total cost of ownership" associated with an SKF solution relative to the next best alternatives. As a result, the company has increased cross-selling capabilities, enabling sales people to increase close rates by 50-60%.

• Kennametal -- This $2.4 billion supplier of tooling, engineered components and advanced materials has created a dynamic, value selling process that is enabling it to continuously grab new market share and increase profitability. Steven Verdel, director of global strategic sales planning and development, explains that the company has spent several years building its sales force capabilities, enabling its people to identify, analyze and demonstrate value. "We make the right people heroes," he says, referring to the company's ability to support customers in the development of solid business cases. Interestingly, the company emphasizes sales coaching and pays an attractive sales commission based on one's ability to document value delivered. In this way, it reinforces the behavior it seeks to encourage. It now has 1250 sales professionals and 240 managers participating in its "Customer Acquisition Process."
  

• Grainger -- This $6.4 billion powerhouse in industrial supply underscores the case for taking the long view when trying to turn one's people into "value merchants." Deb Oler, vice president of sales, described how her sales organization developed a four-year plan -- embraced and supported by the CEO -- to transform the sales force into specialists in customer value management. During that time, the organization developed a rigorous accreditation process and drove its new thinking deep into the culture. Now, the company claims to have 80% adoption -- leading to far stronger customer penetration and share of wallet. Sales, meantime, are at an all time high.

• PeopleFlo -- On the entrepreneurial front, Franklin Park, Ill.-based PeopleFlo has demonstrated how a young company can bring value-driven thinking deep into its DNA and apply it systematically. This was the only way this unrecognized manufacturer was ever going to break into the market for sealed pumps -- a market dominated by much bigger players. By building a business model based on partnership, lean manufacturing principles and guaranteed savings, William Blankemeier, the company's CEO, explains that it has been able to clearly differentiate itself and land profitable contracts with major manufacturers. Indeed, the firm's "customer value managers" are expected to understand their customer's business, substantiate their value claims and document the value with an ROI calculator.

What impressed me most about this event was the recognition -- and evidence -- that so-called mature industries are actually far ahead of more glamorous sectors in terms of proficiency in value management. I suspect the enterprise software and management consulting companies I've spent much of my time with are resting on their margins in many respects. They haven't yet faced the wall of commoditization that many of the companies featured at this event have faced.

But they will. Better to get ahead of the curve. Better to embrace this future that revolves around documenting and demonstrating value as opposed to simply asserting it.

It's not easy. It's a commitment. But this is what your customers want -- even if they haven't asked for it yet. Show them the money or, eventually, they will show you the door.

Tibco Architects Thought Leadership

Let’s face it. When you’re in the business of selling technology that connects different types of corporate computer systems together, things can get pretty dry. And, predictably, most marketing messages that come out of this space are pretty dry techspeak.

Vendors talk about “interoperability within heterogeneous platform environments” and “connectivity through messaging-oriented middleware.”

However, one company, Tibco, has attacked the positioning challenge with a different –- and even humorous -- approach to promote its leadership in this market. The vendor turned to new social media – in this case, YouTube –- to launch a series of humorous videos that carry its message that technology need not be so complicated and head spinning.

The vendor’s videos feature a Ken-like doll –- named “Greg the Architect” -– that has created quite a bit of buzz in its market.

Just recently, for example, BtoB Magazine cited the Tibco “Greg the Architect” campaign with the BtoB Best Award for Best Online Campaign.

As the magazine’s judges put it: “After viewing much well-meaning, essentially hollow advertising showing us our global village photographed just so, it's refreshing to see such low-cost, imperfect creativity as the ‘Greg the Architect’ campaign where, at times, you can literally see the hands behind it.”

Tibco manages to take subtle swipes at its competition in the videos, and also parodies much of the so-called “FUD” (fear, uncertainty, and doubt) that characterizes the enterprise software market. On YouTube, as of this writing, the video has been viewed more than 52,000 times. The two follow-up videos in the series have had a total of 26,000 views. For a specialized audience such as SOA architects, those are numbers marketers would be willing to pay hundreds of thousands of dollars to reach through conventional channels.

As BtoB puts it: “The videos are extremely entertaining—and we don't even know what service-oriented architecture is. We can only imagine the response from the professionals.” 

Gideon Gartner's Analyst Firm of the Future

Is there room in the marketplace for another influential research and analysis powerhouse to rival Gartner? Gideon Gartner thinks so.

At Knowledge Capital Group's recent Analyst Relations Summit in Orlando, Gideon noted that there are 50 million enterprise IT users worldwide. However, only a fraction of them -- 20 thousand -- have advisory seats with the Stamford, CT-based research firm that bears his name. (Gideon, by the way, cashed out a long time ago -- though his name still hangs on the billion dollar research firm.)

Given that Gartner is the "900 pound gorilla" in the analyst research world, its opinions carry enormous weight. Analysts at that particular firm have the power to make or break a deal (or vendor). So, when companies launch thought leadership marketing initiatives, they are often responding to or building on research produced by the firm.

While other companies such as Forrester, IDC or Tower Group may be influential in particular market segments, Gartner -- which gets the majority of its revenue from end users and therefore, is relatively independent -- remains king of IT analysis.

Gideon believes there is great opportunity to go down market and reach all the other individuals who need research and an expert's advice to make a smart IT decision. So far, no one has really jumped at the challenge. A new model, he believes, would rely on the expertise of a network of independent analysts -- much as his previous firm, Giga (which was later sold to Forrester), did.

The problem, he believes, is capital. As he noted, it takes a lot of money to bankroll a sales force that could go out and sell these services to a wider audience.

But what if these services were sold on a direct marketing model? Perhaps there's an opportunity to sell IT advisory services on a wider scale by adopting a new marketing model that isn't dependent on a large, expensive field sales force. It might sell these services the way CDW or Dell sell computers to the SMB marketplace.

Any takers? I think it's a cool idea. If you buy the premise and see a way to make it happen, please give me a ring.

The Top 5 Issues Facing B2B Marketers

What are the key issues facing B2B marketers? According to MarketingSherpa's Sean Donahue (who spoke last week at the Demand Generation Summit in San Francisco), the top 5 issues are as follows:

1. The Growing Committee. Sales cycles are now being extended and complicated by the addition of more decision influencers and decision makers. Research suggests that the average number is 21 in companies over 1000 employees (nearly 7 at companies with 100-500 employees). That's quite a gauntlet to run.
2. The Right Content at the Right Time. Given the expansion of the buying committee, marketers are challenged to present positioning and messaging content  that is relevant to varying parties at different stages of the buying cycle. In the awareness and research stages of the buying cycle, it's vital to provide content that addresses high level issues and buyer problems. This is where sellers are least confident in their development of messages. In the negotiation and purchasing stages, it's appropriate to produce content that's more product and solution oriented. Unsurprisingly, sellers are more confident  about producing this type of material.
3. Getting Landing Pages Built and Tested. Research suggests that marketers feel they have too little time to create stellar landing pages and believe like their departments are too overloaded with other work to do this right. This is a problem. It's where the rubber  meets the road. If the copy writing and layout are all wrong, conversions will collapse -- or never rise in the first place.
4. Being Everywhere. In 75-80% of cases, buyers say they found their vendors (not the other way around). This has to be a discouraging statistic as far as marketers are concerned. Won't their bosses slash their budgets if they find out that marketing is only influencing buyers in 20% of all cases? Not so fast. The point here is that you have to be available when the buyer is ready to act. Buyers may or may not remember that you influenced them in the first place. But you have to be there when they need you. As we've written previously, you better be in their peripheral vision. 
5. Handing  Off the Right Leads.  Many marketers continue to confuse mere leads with qualified or "sales-ready" leads. Big mistake. Better to have fewer leads, but better leads. Best practice marketers tend to generate fewer leads, but turn more of them into prospects and more of those into sales. The question is: What will it take to generate the right leads instead of merely more leads? If your marketing department is obsessed with the raw variety of lead, then its obsessions are misplaced.

What all this tells me is that organizations are going to have to get increasingly serious about generating relevant content that engages the right decision makers/influencers at the right moment. Strategically developed and compelling content can enable marketers to address all of these challenges. It's all about relevance and credibility. Without that, you are, well, incredibly irrelevant.      

Valuing Value

If you want to be an innovative B2B marketer, you should take a close look at companies in the most commoditized B2B industries. The prospect of a hanging, as they say, can concentrate the mind.

Well, if you sell ball bearings or cement or industrial chemicals, there's a good chance you don't have a lot of profit margin to work with. You are probably one (wrong) step from oblivion. But precarious market positions can drive impressive advances.

That's what three far-sighted academics -- James Anderson, Nirmalya Kumar and James Narus -- discovered in their research into the state of B2B.  Their new book,  Value Merchants: Demonstrating  and Documenting  Superior Value in Business Markets, is a must read for all senior leaders and customer-facing executives looking to differentiate their companies (and themselves) in today's increasingly competitive environments.

What they've discovered is that it is no longer enough to simply project business value. If we hope to survive and thrive in an era of growing skepticism, we have to prove it.

With profiles of such companies as Grainger, Rockwell Automation, SKF, Milliken, Tata Steel and Quaker Chemical, the authors convincingly demonstrate that the future is all about demonstration. Buyers, in other words, will no longer take our promises on faith. They expect us to measure and demonstrate business value over time. In many cases, our compensation may even be tied to results.

Contrast this future with a common scenario of the past in which, say, the software sales person throws code over the wall and runs for cover before the bomb explodes.

The Power of a Story: Thought Leadership as an Emerging Discipline

As Lois Kelly notes in her book Beyond Buzz, successful marketing is now about “having conversations and engaging with people in interesting discussions, through new and traditional channels.”  In the B2B marketing arena, the new driver of credible and compelling conversations is Thought Leadership.

But in order to be a recognized thought leader, you have to be able to present powerful and relevant stories that are well crafted, well researched and validated with facts and data points.

In fact, I think the emerging discipline of Thought Leadership has all the elements of a compelling story. To cite some of the themes that Kelly thinks are universally interesting and relevant, we can say: 

This is a David and Goliath story. Companies in the fields of Business Technology and Professional Services have an opportunity to rapidly level the playing field with their larger competitors in this new era of positioning and perspective.

Whereas vast resources were required to build a brand and establish a presence in prior eras, companies can now leverage the new levers of B2B Marketing to capitalize on their agility and responsiveness.

This is a Counterintuitive story. You realize results not through conventional actions. It is unconventional and counterintuitive to bear down and focus on creating compelling content. It forces companies who are wrapped around their products to instead focus on how they are perceived –- and how they can strengthen their positioning in the customer’s mind. What's more, rigorous measurement of the impact of thought leadership initiatives and campaigns can reveal counterintuitive insights that drive still higher performance.

And this is an Aspirational story. It’s about how marketing and sales professionals can achieve far more with their resources. It’s about how they can rise to the next level in their careers.  It’s about turning marketing into a highly respected and valued force –- a force multiplier that drives profitable growth

These are just some of the reasons companies will increasingly embrace Thought Leadership and recognize it  as a critical new discipline. These are some of the factors that will lead to the development of thought leadership strategies and platforms. In an era of deafening noise and blinding distraction, it's the one thing that can help you cut through and engage in a valuable conversation.

How Thought Leaders Can Capitalize on the Analyst Effect

Few people understand the full power and influence of industry analysts in the technology solutions marketplace. The top analyst firms - such as Gartner, Forrester Research and IDC - conduct thought-leading research and provide valuable advice to both technology sellers and buyers. Companies that hope to build credibility and drive growth in the technology marketplace need to have a strong grasp on how these key market influencers can strengthen their thought leadership marketing efforts.

In his recent book, Influencing the Influencers: Best Practices for Building Valuable Relationships with Technology Industry Analysts, Knowledge Capital Group founder and CEO William S. Hopkins discusses the "vital interdependence" that links technology sellers, buyers and analysts. In the coming years, they will "need each other more than ever in order to capitalize on the opportunities coming down the pike" and manage the attendant risks, he contends.

Over 50% of respondents in a study from the Analyst Strategy Group consider advisory analyst opinions when creating their short lists. And over 30% have excluded a vendor based on a negative opinion they have received from an analyst.

Indeed, industry analysts exist because business technology is complex and fraught with risk. Prospective buyers look to the analysts for third-party guidance to help them make smart decisions and avoid making foolish ones. Considering that companies spend millions (or hundreds of millions) of dollars each year on information technology alone, it's not surprising that they would find value in the opinions and perspectives of industry analysts. Gartner and Forrester are particularly influential among technology buyers. Since they derive a majority of their revenue from buyers instead of sellers, they are considered the most objective providers of advice in the field.

The Fatal Joke

Some B2B marketers have a bad habit of getting  very interested in a single medium or channel. It may be trade shows, or email -- or even blogs, webcasts or podcasts.  They become enamored of the cool new  medium of the week and start to obsess over how they will compete with it.

It's like that old Monty Python skit about the The Funniest Joke in the World. This joke is so funny that anyone who hears it will soon die of laughter. From their foxholes, the British use it against the Germans in World War II. Sure enough, the German soldiers hear the joke (translated in German), begin to laugh uproariously and promptly fall over dead.

Seems to me, many marketers are looking for their own fatal joke. Only, they are hoping to tell it to their prospects. They seek the perfect medium -- the high power channel that will drive results and bring home the big bucks. They want an easy way to knock em dead.

Alas, the joke is on them. There is no killer medium. The magic, as they say, is in the mix.

What’s most important is to manage marketing media or channels in a disciplined manner. Just as portfolio theory teaches us that our best financial outcomes are typically attained through diversification, we need to think in terms of a diversified, marketing investment portfolio.

The New Conversationalists

What do you want to talk about? That's the question we all should want to have answered because, as they say, "markets are conversations." So if you want to get attention and drive growth, you better be an exceptional conversationalist.

Just ask Lois Kelly. In her exceptional new book Beyond Buzz: The Next Generation of Word of Mouth Marketing, she offers a compelling perspective on the state of marketing. It's not merely about the tactics -- blogs, podcasts, webcasts, videocasts, search engines. Rather, it's about the discussions we are having  and the stories we are sharing with each other.

As she puts it: "The big idea is simply that marketing is about having conversations and engaging with people in interesting discussions, through new and traditional channels. Technology may be becoming the heart of marketing and communications, but conversations are the soul."

If you want your company to stand out in today's blizzard of noise, you must provoke conversations about issues that are relevant -- and interesting -- to your customer. That's how you build trust -- and draw people in. Be an insightful guide -- a luminary in the darkness. Or be a provocateur -- someone who happily eviscerates the conventional wisdom.

"Some of the most effective conversation starters are points of view based on beliefs, contrarian views, or unusual advice," says Kelly. "A good point of view gently (or not so gently) smacks people in the face and gets the response, 'That's interesting. Tell me more.'"

She tells the story of how one IBM corporate strategist seemed to be putting people to sleep with his dull, jargon-laden discussion of how companies can become more innovative. No story, just a lot of  corporate-speak about "value chains"  and "ecosystems" and  "unbundling" and "disaggregating." 

By contrast, Stuart Moore, the cofounder of Sapient, had a more interesting take. When he was asked the same question, he said, "There's no mystery to innovation. You just have to look through a new lens to see the possibilities. In many ways innovation is free."   

You can imagine one guy boring you to death with PowerPoint slides, while the other guy inspires you to buy the next round, lean in and listen intently. But that's just it. Provocative, compelling conversations are the new marketing.

So what should we talk about?

BearingPoint Drives Growth through Thought Leadership

Want to strengthen your company's positioning, generate demand and accelerate sales cycles? Then you need to create compelling thought leadership, leverage digital marketing channels and diligently measure the impact of your efforts.   

In a recent AMA webinar, Michael Gauthier, CEO of e-tractions, and Paul Dunay, director of global field marketing at BearingPoint, offered this advice and other insightful perspectives on the power of thought leadership marketing.

Thought leadership -- defined as "engaging prospects and customers with new, proprietary insight" -- represents a powerful new way to increase awareness and direct response, they stated. Leveraging channels such as search engines, banner ads, RSS, podcasting, videocasting and blogging/social networking, companies can generate measurable success.

They can track not only awareness metrics around visitors, interactions and click-throughs to content, but direct response metrics that are tied to the sales pipeline and conversions.

Measurement is particularly critical to campaign success -- and demonstrated impact. Dunay, who employed Gauthier's firm  to support an extensive campaign (on VOIP), notes that he was able to "shoot the losers" and "maximize the [marketing] paths that were working."