LeadCrunch[ai]: Why the B2B Funnel is Broken ..... and How to Fix it

Lookalike marketing powered by artificial intelligence CONTRIBUTORS Steve Biafore, Sanjit Singh, Pranav Palasamudram LeadCrunchN. America HQ, 101 W. Broadway #200, San Diego, CA 92009 www.leadcrunch.ai ▪ 888-708-6649 ▪ [email protected]

Lookalike marketing powered by artificial intelligence The B2B Sales Funnel is broken. We identify companies. We leave voicemails, send emails, generate InMails, and push ads. But most of these are deleted, spam filtered, ignored, or blocked. So then we try to use new marketing technologies to reach prospects. But despite the mind numbing number of sales and marketing technologies we use, we still can’t answer two thorny questions that plague our sales funnel: 1. How do you find the optimal audience to target? 2. How do you move this audience efficiently down the funnel? Platforms like Salesforce, Oracle, and Hubspot make it easier to track and nurture prospects but do little to help us target accurately. We throw huge dollars towards implementing these platforms, yet only improve things incrementally. So how can we better understand our customers and find ideal targets? We know which opportunities we win and lose. We capture massive amounts of data about our sales targets and our efforts to pursue them. Why isn’t all this data helping us to get better results? As you may have already experienced, it’s actually not easy to extract real value from this mountain of data. But based on everything we have read and after spending over three years looking at this problem, we have come to one unified answer to the problem: Since discovering this, we built a product to do exactly this. It analyzes your best customers, constructs a Data mine your best lookalike audience, builds precise personas, and helps customers to you optimize activity through the funnel. holistically optimize In this white paper, we’ll explain why the B2B sales your funnel. funnel is broken and how to fix it. We’ll share some frameworks we have developed that we hope will help you think about these issues in a deeper way. LeadCrunchN. America HQ, 101 W. Broadway #200, San Diego, CA 92009 www.leadcrunch.ai ▪ 888-708-6649 ▪ [email protected]

Lookalike marketing powered by artificial intelligence In theory, demand generation is simple. It identifies candidate companies to move from the Universe of all companies, U, to the set of your customers, C. So this data must be greatly simplified to be So the key question is: “What are the important data and actions that contribute to useful. Simplification, done correctly, distills the data down to its key elements. the process of moving from U to C?” Data Simplification, done incorrectly, distorts the scientists would say, “Everything matters. Every contact, every relationship, every data. However, a badly distorted data model competitor, every message, and every for demand generation is sadly the norm, so we call it the “Standard Model”. conversation matters.” This answer is less than helpful to the marketers or salespeople trying to make their quarterly numbers. The Standard Model of demand generation separates each phase of the funnel and optimizes them in isolation. Top of Funnel (ToFu) leads become Marketing Qualified Leads (MQLs), then Sales Accepted Leads (SALs), then Sales Qualified Leads (SQLs), and finally closed deals. The leads that do not flow all the way through these steps simply become lost deals or get nurtured until they re-emerge at another stage. LeadCrunchN. America HQ, 101 W. Broadway #200, San Diego, CA 92009 www.leadcrunch.ai ▪ 888-708-6649 ▪ [email protected]

Lookalike marketing powered by artificial intelligence Most companies’ processes look similar to the Standard Model, which generated the idea of a sales funnel. While the funnel is a good shape to describe the general narrowing of leads as you get closer to a sale, it gives poor direction to marketers and sellers about how to optimize their activity to improve results. The main problem with the sales funnel is that it breaks the buyer journey into discrete steps. This encourages marketers and sellers to optimize each step in isolation instead of taking a holistic, data-driven approach. “Optimization in isolation” is an easy path to follow, but it is the fundamental cause of poor B2B sales performance.” LeadCrunchN. America HQ, 101 W. Broadway #200, San Diego, CA 92009 www.leadcrunch.ai ▪ 888-708-6649 ▪ [email protected]

Lookalike marketing powered by artificial intelligence For example, consider the top of the funnel. Some companies still treat this part as a numbers game where they generate a huge volume of leads and prospects. These companies will typically set some very broad criteria based on industry and company size to create a pool of leads. Then they “spray and pray” by mass emailing and calling those leads until they find interested buyers. This approach creates both inefficiency and lost opportunity. If the goal is to quickly create as many new customers as possible, then we can’t rely on the volume game alone Let’s look graphically at where you are wasting your time. Obviously, you should not spend time trying to sell customers that you cannot close or that you don’t want as a customer. So the question is, how do you identify those targets you want as customers and then screen them out? Universe of all companies Your target population depends upon many factors (competition, product Companies you Companies you pricing, features, distribution, brand, can close both want and Companies you channels, messaging, relationships...) but can close want as customers ALL of these factors are illuminated by your current customers. LeadCrunchN. America HQ, 101 W. Broadway #200, San Diego, CA 92009 www.leadcrunch.ai ▪ 888-708-6649 ▪ [email protected]

Lookalike marketing powered by artificial intelligence Universe of all companies Defining lead search criteria based upon industry codes, headcount and/or revenue Companies you Companies you bins "draws a square". This square can close both want and Companies you includes many companies that you do not can close want as customers want, many that you cannot close, and misses many that you both want and can close. Universe of all companies WASTED EFFORT Simple criteria deliver high quantity, low quality leads. The result is both massive Companies you Companies you wasted effort and enormous missed can close both want and Companies you opportunity. can close want as MISSED customers OPPORTUNITY LeadCrunchN. America HQ, 101 W. Broadway #200, San Diego, CA 92009 www.leadcrunch.ai ▪ 888-708-6649 ▪ [email protected]

Lookalike marketing powered by artificial intelligence ToFu MQL SQL New Customer WRONG QUESTION: WRONG QUESTION: WRONG QUESTION: WRONG QUESTION: How many raw leads can I What percentage of MQLs What is my MQL to SQL What is my SQL to get that match the (crude) can I get from my list of conversion rate? customer conversion rate? Ideal Customer Profile I raw leads? What actions are closing defined? the most deals? RIGHT QUESTION: RIGHT QUESTION: RIGHT QUESTION: RIGHT QUESTION: Are we starting with the Which raw leads are worth What are the SQLs that How does each new right raw leads. What are the cost of human contact we’re not getting but closed deal shed light on the salient characteristics verification based upon should be getting, and the best actions and of my best customers and factors such as expected why? Are we starting with processes across our how can I find more LTV? Are we getting the the right raw leads? What entire sales & marketing companies like them? right MQLs to create great are the best approach? new customers? actions/processes to get the kind of MQLs that will become SQLs and then customers? Optimization in isolation causes us to ask the wrong questions at almost every step in the funnel. Optimizing in isolation means we only care about the nearby steps in the funnel. For example, a typical optimize-in-isolation top-of-the-funnel lead generation process only cares about finding companies that match a so called “Ideal Customer Profile,” not how likely the seller is to convert these raw leads into MQLs or valuable customers. Instead, let’s look at the funnel differently. Let’s replace the Standard Model with a Holistic Model. The first step in doing that is to start asking the right questions. LeadCrunchN. America HQ, 101 W. Broadway #200, San Diego, CA 92009 www.leadcrunch.ai ▪ 888-708-6649 ▪ [email protected]

Lookalike marketing powered by artificial intelligence The Holistic Model does not assume that buyers will move through the traditional stages in the linear sequence or time frame that we expect. Rather, this model simply observes what actions prospects take and when they buy. It then constructs a set of probabilities for each prospect. Then, depending on what action the prospect takes, the Holistic Model predicts what is likely to happen next. The Holistic Model is meant to capture the natural complexity of how accounts move. Each account is “free” to follow its own unique journey toward becoming a customer. Along the way, we can use data to surmise what actions we can take to maximize the odds of a sale. Task Standard Model Holistic Model (Optimization in Isolation) (Full Funnel Optimization) Build Audience and You define campaigns in shallow terms You build an audience and personas Personas such as industry, headcount, or based upon the deep characteristics revenue. that determine what companies need and how they buy. Create and Use Contact You collect contact data for as many You prioritize accounts with a Data companies as you can and prioritize statistically higher probability of closing. accounts in an ad hoc manner. Qualify Accounts Qualification is driven by prospects Qualification is driven by exhibiting “raising their hands.” behaviors that are statistically correlated with buying. The Holistic Model is more complex than the Standard Model, with every step connected to every other step. Data flows freely across the entire demand generation process. All that matters is that you know which audience to target and which leads have the greatest probability of closing. Moreover, this model can tell you what information these prospects will need in order to buy. LeadCrunchN. America HQ, 101 W. Broadway #200, San Diego, CA 92009 www.leadcrunch.ai ▪ 888-708-6649 ▪ [email protected]

Lookalike marketing powered by artificial intelligence To build Holistic model, you need to first take a hard look at your current funnel process. Below are some questions you should ask, along with some instructive commentary. What is our primary performance metric for ToFu lead generation? Quality of Leads Where do you fall? Number of Leads If you fall closer to the “Quality” end of the spectrum go to Q2. If you fall closer to the “Number” end of the spectrum, go to Q5. How do you measure the quality of leads? What makes a lead good or bad? Is it strictly a property of the target account or is it also about the degree of “match” between you and the prospect? Is a closed sale the only true indicator of quality, or are there high quality accounts that you fail to close? Do you pursue the accounts you want, the accounts you think you can win, or the accounts that meet both criteria? If you look at data in all 3 categories, you’ll start to figure out how to prioritize accounts. How can you do a better job of defining target markets and personas? Here’s why you should not filter ToFu leads based on basic firmographics such as industry, size, and geography. Firmographic data is The firmographic view horribly inaccurate — of companies is very If everyone is using 40% of industry codes shallow. If you want to the same data then are wrong or incomplete know what a company everyone is while revenue values really does you must knocking on the are typically off by more look deeper. same doors. than 65%. LeadCrunchN. America HQ, 101 W. Broadway #200, San Diego, CA 92009 www.leadcrunch.ai ▪ 888-708-6649 ▪ [email protected]

Lookalike marketing powered by artificial intelligence There are many data vendors. Most of them sell data sorted strictly on basic firmographics. Using deeper company insights to construct a target audience is more effective if you have the data to do so. And our data shows that there are great rewards from taking this deeper dive. What is the cost of a bad lead? Bad leads hurt everything you do. They waste time and money, and squander your most expensive labor — that of your sales and marketing teams. They also charge you a steep opportunity cost if you consider how much yield you would have received from good leads. And finally, bad leads can demoralize an otherwise motivated team. How many good leads are we missing? The good leads that are not in your funnel may actually be hurting you the most. Particularly, if your top competitor has those leads in their funnel. In fact, the “missed opportunity” part of the diagram above is ignored by many companies. The ratio of good leads to bad leads will determine a stunning number of key performance indicators (KPIs) for your business including sales efficiency, customer acquisition cost (CAC), profitability, customer lifetime value (CLV), and churn. Which comes first, the company or the contact? Before searching for the right contact, you must first ensure that you are targeting the right company. Looking at data from their own customers, marketers are overly focused on titles and not focused enough on the right companies. In practice, many accounts that are great leads are ignored because they lack the specific “required” contact data. Many bad leads are worked because they have the “required” contact data. Using contact data as a primary factor to define campaigns is a common mistake you must avoid to survive and thrive in the future.. LeadCrunchN. America HQ, 101 W. Broadway #200, San Diego, CA 92009 www.leadcrunch.ai ▪ 888-708-6649 ▪ [email protected]

Lookalike marketing powered by artificial intelligence The B2B Sales Funnel is broken. That’s because the Sales Funnel approach to generating and selling leads simply doesn’t work anymore. It breaks the buyer journey into discrete steps and encourages you to to optimize each step in isolation instead of taking a holistic look at what’s happening. Optimizing each step in isolation causes us, in turn, to ask the wrong questions during the lead generation process. As a result, the sales funnel approach helps you track and nurture prospects but does little to help you target leads. A data-driven holistic approach to demand generation, on the other hand, helps you target leads more accurately. Using information on how and when customers buy, this approach constructs a model that tells you which prospects to target, which prospects have the greatest chance of closing, and what information they will need to buy. But to build a data- driven holistic model, you first need to take a hard look at your present approach and then ask the right questions. The answers will help you build a holistic model of demand generation that more accurately targets leads. It’s the same approach LeadCrunch[ai] uses to help clients. We analyze your best customers, construct a lookalike audience, build precise personas, and help you optimize activity through the funnel, boosting sales and profitability. For further assistance, please contact us. We hope you found this information helpful. Please contact us if you would like help following any of the recommendations in this white paper. www.leadcrunch.ai