Every B2B company has to find a balance between customer acquisition and existing account growth. Many are finding tremendous opportunity for revenue in the latter and shifting their focus to the accounts with the most growth potential, but it’s not a simple transition. eMarketer’s Jillian Ryan spoke with Mark Kovac, global head of Bain & Company’s Commercial Excellence Group, about what measures need to be taken by B2B marketers to drive more revenue from a small subset of existing accounts.
In your work with B2Bs, where do you see marketing departments concentrating their efforts?
We’ve noticed a shift—especially with larger, more traditional B2B companies—where marketing focuses less on trade shows and lead generation on their website.
There are company-wide resource allocation shifts to account-based management support. Instead of concentrating on acquisition, there’s now an effort to use data to identify and align cross-functionally around the full customer life cycle, including retention and upsell and cross-sell opportunities.
Does that mean you see less emphasis on lead generation and top-of-the-funnel initiatives?
B2Bs have a real choice around acquisition vs. share of wallet [SOW] marketing, in which growing the contract size of an existing customer set is more of a priority than new customer onboarding. SOW is a customer measure that tells marketers how much more an existing account can potentially spend on a product or service or with your business over time.
Many companies we work with want to do both, but the capabilities and the data are very different. Marketers require a different stack for each part of the life cycle.
Our advice is to do the math. You know what your goals are. In order to achieve them, do you need to go out and win new accounts, or do you have the opportunity to reach your goal by increasing your SOW? In our experience, the easiest money is always from SOW increases.
How can B2Bs get their SOW measurement in place?
Start with customer segmentation. In many B2Bs, only a small subset of the customer base—20% to 40% in some cases—drives the lion’s share of their profitability. That means focusing on SOW with, for example, 20% of customers that drive 50% of revenue.
A Net Promoter Score (NPS) is a key metric to determine which accounts are driving revenue and profitability. This is generally a marketing-owned feedback system that can be used throughout the customer life cycle. For example, you can send out surveys after a product is installed or after a call into customer service. We call those transactional surveys, which ask the customer if they would recommend us based on their experience.
We also recommend annual or biannual surveys to gauge the health of a relationship. Generally less than half of accounts respond to these surveys, so marketers should also supplement those insights with other sources of first-, second- and third-party data. We even see more advanced marketers implement predictive analytics to understand which accounts will be most valuable or have the most room for growth.
Can you share an example of how a client implemented SOW and NPS measures for their customer growth plan?
We recently went through this process with a client—a data center that sells to big data center operators like Google, Amazon, Facebook and Microsoft.
After selecting a handful of test pilot accounts, we established the starting point calculation for the current SOW for each customer. We used an opportunity calculator to see what the potential threshold for maximum SOW could be. The gap between current and potential SOW showed the accounts team what opportunities they were missing in their engagement with those accounts.
They were able to see that certain buying centers could be further penetrated. Then, through that examination, marketing and accounts aligned to come up with a strategy to sell into that center to increase the SOW. That meant reallocating resources and executing an integrated marketing and sales approach.
How can B2B marketers align with other teams to implement these customer growth strategies?
They need to have a sound account management process in place to understand how customers make decisions. This isn’t a pre- or post-sale issue—it needs to be managed all the time.
Most companies are functionally aligned, not customer life cycle aligned. That can be a challenge, but it’s also an opportunity for marketing to think about the key role they can play. Marketing can be the glue that designs the internal mechanisms and processes to align all teams around the customer.
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