Executive Summary

As a pro-active new business agency, Alchemis generates leads and qualified appointments through intelligent conversations. Much has been reported about how the rise of digital communications has/will impact on the business-to-business (B2B) sales process, but our strongly held belief is that communication needs to include a good level of human interaction (i.e. phone calls and meetings).

Alchemis works specifically with marketing services agencies so we undertook research into our client base, examining key successes over 2011. We also investigated wider and more generic research into all B2B markets in order to quantify the significance of personal contact in the sales cycle and how best that should be deployed.

Our key findings were:

• Human Interaction remains vital, both for activating a lead and nurturing it through to business conversion. The key benefits of personal contact include:
  • The ability to identify a true need
  • Enabling an opportunity to be accurately evaluated to see if it is right for your business
  • Ensuring opportunities are not missed
  • Increasing conversion from opportunities
• The value of the ultimate sale does not dictate the frequency of human interaction required to convert business
• Email and digital tools are useful, but suit some industries more than others. However, a general trend indicates effectiveness is declining (research from Marketing Sherpa taken from a survey of 1745 marketers, showed SEO and email saw a 50% decline in their overall effectiveness in 2011 versus 2010)

All of these points are covered in more detail throughout this document.

It is worth highlighting that the report is based on identifying the importance of human interaction. Whilst we compare other B2B marketing and sales techniques, to evaluate each area in detail would be a much larger undertaking.

We have looked at the frequency of interaction and how best to manage that contact. We hope that this report proves useful and insightful in demonstrating how human interaction allows you to get a true picture of YOUR target market and how it is central in selling your product or service effectively.

The Report

Approaches to B2B sales are varied and the spread of digital media shows no sign of slowing down – but have they really changed the psyche of the purchaser and how much influence do digital (or other) communications really have in buying decisions?

This report seeks to establish the key routes to market for B2B companies, through the examination of various research papers cross-referenced against our own data.

It also crucially examines if personal contact and interaction remain an important part of the business development process or if new, online and digital techniques are taking over.

Figure 1 below illustrates how B2B spend has been spread across all channels in 2011.

Figure 1 – B2B Marketing Expenditure:

Source: Marketing Sherpa B2B Marketing Benchmark Survey

A recent paper by the SCi Sales Group investigates the influence of digital techniques on the B2B sales cycle versus that of human interaction and the Marketing Sherpa Benchmark Report examines current patterns and trends within B2B marketing as well as making forecasts on future activity.

Both papers cover generic B2B sales techniques and processes in many different markets. Our data is based solely on marketing agencies and it is interesting to compare this specific market against the wider SCi and Marketing Sherpa findings.

Figure 2 – B2B marketing challenges versus priorities:

Source: Marketing Sherpa B2B Marketing Benchmark Survey

To break down the whole process and examine every facet of the sales cycle would be too involved, but there are two key areas to look at based on the challenge versus priority graph above:

1. Lead generation and establishing initial contact with a prospect
2. Nurturing and converting a prospect from initial contact to sale

Figure 2 highlights that lead generation is a key priority for most companies, but that conversion to business remains the biggest challenge.

Initial Contact/Lead Generation:

It is clear from the graph above that lead generation is both a high priority for B2B marketers as well as a big challenge.

As a small business owner, I know how we as an organisation make decisions on new products or services based on the following simple criteria:

• Requirement either to replace an existing or to invest in a new product/service
• Cost
• Upheaval and risk factor of change

But, how does a company engage with myself and my fellow owners of Alchemis and establish our interest in the first instance?

As highlighted above, the primary routes taken in B2B sales to establish initial contact include:

The SCi research reports the findings of B2B Marketing Magazine, who asked 211 executives their thoughts on each channel. The most interesting points from a human interaction perspective were that, despite the difference in spend in each area:

• 8% cited email as the least effective
• Only 1% highlighted telemarketing as the least effective

As these figures are across all industries, an element of caution needs to be taken. Each approach will differ in its effectiveness depending on the market within which it is being deployed.

What the statistics do not show is the reasoning behind the choice. Each method has its strengths and weaknesses.

• Email is cheap, but is becoming increasingly competitive and crowded
• Events are a good way to meet face-to-face, but a) there is no guarantee you will meet the decision maker and b) at an exhibition, the prospect is more interested in selling themselves, rather than listening to you sell yourself
• SEO/PPC gives you volume of traffic, but can you guarantee the quality?
• Direct mail is expensive
• Telemarketing is comparatively expensive, but it allows you to establish a direct interest quickly. It identifies buying signals and allows you to drive the conversation

Hence, it is worth viewing this from a different perspective. i.e. which approach makes the prospect feel most valued?

The SCi report breaks “value” down in a human way – at the end of the day, B2B sales are based on communicating to humans. It asks, if it were your birthday, what action from your friends would make you feel more valued?

1. A text message
2. An email
3. A card
4. A phone call
5. A visit/meeting

The answer is obvious, so when 100 managers were asked which marketing channel made them feel most valued, face-to-face meetings and telemarketing came top with 81% between them.

Within the marketing industry, adding perceived value versus your competitors or the incumbent is a crucial element in any sale, so as an industry it is suited to the more personal approach. It is often very difficult to identify genuine USPs or points of difference from agency to agency, so in terms of developing new business, the initial contact to establish an interest is vital. Ultimately, agency experience (and therefore agency personnel) will be a major reason for selecting a partner and that initial call needs to reflect that agency personality effectively.

Human contact allows you to do this in a way that email, websites and direct mail never will.

A survey of our clients found that approx 65% have used email marketing as a tool. The main reasons cited being:

• It’s cheap
• It can be tailored to specific customers
• It’s traceable and therefore measurable
• It’s a good way to remain in touch with prospects

However, the main reason for engaging a new business agency has often been as a result of poor responses and conversions from either sporadic or regular emailing campaigns.

Prospect Nurture:

Once contact and interest have been established, communication will be via telephone, email or face-to-face meetings (inclusive of online video meetings).

SCi researched a group of buyers across a wide range of markets and the group were asked if they had either had a telephone conversation or meeting with a company before placing orders on their last 3 purchases.

The result was that 70% of buyers had received either a call or had a meeting prior to purchase, aside of how the initial lead had been generated.

Alchemis cross-referenced the SCi findings against our own over the course of 2011 to see if there are any patterns that may help our clients develop new business.

Our data examines a broad mix of clients across different marketing disciplines in order to establish trends. We have examined where and why clients have won business and surveyed each conversion to establish frequency, type and timescale of communication/touch points from initial contact through to conversion to business.

Size/budget of new business win is a key factor in how much personal contact is required with any given prospect.

The SCi findings were that:

• Average order value with human interaction was £22,734
• Average order value without human interaction was £1,242

However, these figures covered repeat and new orders. The key was that 100% of new purchases required human interaction, even as low as £300.

Within Alchemis’ client base, 100% of all conversions arise as a result of at least an initial telephone call to generate interest and in almost all cases, further face-to-face meetings have been required in order to secure the business. We do have a handful of cases where business has been won over the phone from conference calls or online demonstrations of a product or service, but this is very much the minority.

More important is the frequency of contact with any given prospect once the initial call has been made.

Whilst some clients have converted business from just one meeting and subsequent calls and emails and others have attended 5 face-to-face meetings, on average clients are being required to meet the prospect face-to-face at least twice before the contract is signed.

The table below shows the number of actual face-to-face meetings required to convert business, based on the value of the opportunity.

It is clear that the number of meetings required don’t differ wildly based on the budget of any given project. There are anomalies where business of £70k plus has been won purely through email and phone correspondence and indeed, comparatively low value wins have taken 60 weeks and 5 meetings.

So what does all this mean?

It appears to be a common theme that a lot of new business is lost as people give up on the process after 4 or 5 points of contact (email, phone and face-to-face). From the statistics above, this means that potential opportunities are being lost. There is no doubt that the most successful of our clients are those who are prepared to follow each step in the right way and at the right time.

It is hard work!

This is highlighted by the example mentioned above, citing 5 meetings required for conversion. The full process was:

• 12 calls in total
• 5 face-to-face meetings
• 9 emails

The end result was a win with a value of £30,000.

The reality is that the company has the potential to be an agency changing client and this is just an initial foot in the door project, but it does highlight the dedication to business development any marketing agency needs to have.

Another area is the time frame from initial contact to securing the business. This differs depending on the timing of the initial contact. If your timing is right and there is an opportunity on the table, the lead-time may be much shorter. However, based on our client conversions, that does not always mean less interaction. It just means it is squeezed into a shorter timeframe.

Whilst not covered by either the SCi or Marketing Sherpa data, it is worth looking at target universe coverage. On face value, email allows you to cheaply cover a vast number of new business prospects and advertising and PR will get you coverage, but the reality is none of these can guarantee:

• Direct interaction
• Prospect qualification
• Prospect nurture

Ultimately, the initial contact with telephone calls can take longer, but a call does allow you to cover all of these areas. It allows you to eliminate the non-interested and focus on those that have a requirement and to agree the best contact strategy directly with the prospect, which may be a combination of calls, meetings and emails.

Often our clients may have a defined number of target prospects. A key reason for using Alchemis is to:

• Identify key decision makers
• Establish contact and interest (eliminate if not interested)
• Create a contact strategy

Once interested parties are identified, we will build a strong rapport with a prospect over the phone and arrange meetings when appropriate. Often prospects will be spoken to 10+ times over a long period before any appointment or opportunity is identified.

To highlight this, it is worth looking at a case study from a client who commissioned Alchemis in January 2009. From a list of 279 companies, we have:

• Identified decision makers and had conversations within 251 of the companies (89.9% coverage)
• Had 943 conversations with the target audience
• Arranged 121 meetings
• Created 13 new business wins

The conversions/wins are shown to demonstrate how effective telephone marketing campaigns can be, but the important part is that we now have a direct relationship with almost 90% of their target audience, that we understand their current situation and requirements and that we have established a contact strategy with all of them. That will include further calls, but will also include emails.

No other approach would allow you to do that.

Conclusions:

Every business is different and all B2B marketing and sales techniques have a role to play. However, within the digital field I do believe that they have led to an element of complacency and laziness in proactive prospecting. Certainly within the marketing agency space, they are, all too often, being used as the easy (but not necessarily the right) approach and often in isolation, without follow up and to little effect.

Building relationships is key and human interaction through the telephone call or meetings is crucial. As covered in the initial summary, telemarketing and subsequent meetings allow you to:

• Identify a need
• Make the buyer feel valued
• Accurately evaluate an opportunity
• Fully explain a proposition with no chance of misinterpretation (a common problem with emails)
• Build rapport
• Handle objections and barriers
• Enhance client/customer service
• Identify areas for cross/upselling

Email and digital communications suit companies and industries with huge target audiences and specific (usually product based) offers. They are a great way of remaining in touch with prospects and keeping “on the radar” once initial contact has been established and often we/our clients use them to good effect in this manner.

Research by BrandScience in 2010 suggests that using 3 channels in a campaign may enhance ROI by 700%. The reality is you need to do what is right for your company in the context of the industry you are in. This may well include more than one approach and a good new business campaign will often use a blend of channels, but don’t under estimate the value of human interaction.

Top line summary:

Following the recent positive feedback from our last White Paper which looked at why prospects agree to meet with creative, strategic and digital agencies, we decided to cut the new business cake a slightly different way and analyse success rates within the most widely targeted markets by our clients in 2011.

Success is determined for us and our 60 clients in several ways – the greatest of which is winning new projects and clients. For the purposes of this analysis we focused on our ability to set quality meetings for our clients with the right decision maker at the right kind of company where there is a current or future need for the services our clients offer.

We took the overall conversion rate (defined as setting a quality meeting from a number of decision maker conversations and represented as a percentage) from each of the 11 most widely called markets in 2011 (see the table below) and compared this overall conversion rate to the conversion rates by marketing discipline. We concluded that any discipline showing an above average conversion rate for that market was deemed to be well received by the decision makers in that market. For example, if the average conversion rate within leisure overall was 8%, and a digital offer within leisure was 9.5%, then we concluded that digital was well received within leisure.

This is a good indicator of the receptiveness of these markets to these offers, but is only based on our calling activity this year and isn’t a defining piece of research. There are a number of other contributory factors that influence the success of the call, including the agency’s relevant clients/case studies, specific proposition etc.

New business campaigns are most effective when the marketing services/disciplines offered are the ones a prospect wants/needs. We would recommend that targeting is based on one or more of the following key factors:

1. Those markets where the agency has in-depth experience (eg. retail, leisure, fmcg)

2. Those companies who are facing the kind of challenges/problems that the agency has experience of solving (eg. decreasing footfall)

3. Those companies who target specific demographic groups who the agency has experience of communicating with (eg. youth)

4. Those companies who are most receptive to certain types of solutions (eg. search, social media)

Here is a table of the 11 most frequently called markets this year based on a total of 107,000 calls made to prospective clients.

The percentages reflect the amount of calling we’ve made to each of these markets – the remaining 28% of our calling is split between other markets such as Automotive, Building & Property and B2B.

Comparison to 2007:

When we compared these most frequently called markets in 2011 to our calling in the same period in 2007, in pre-recession times, there are some interesting observations which reflect the market as a whole:

1. There is more calling now in those markets relying on consumer discretionary spend compared to 4 years ago; markets such as leisure, youth, travel and luxury

2. There is less calling now than in 2007 in high value, business related/long term investment areas; for example, finance, automotive, IT and property are all significantly down in terms of calling compared to 2007

3. Some markets remain constant irrespective of what’s happening in the economy, for example food & drink. There is no significant difference between the amount of calling we did in 2007 versus the amount of calling we did in 2011 in fmcg.

4. Interestingly though, although basic brands remain almost recession proof, retailers are fighting for business and need to differentiate themselves through a range of marketing channels. This is reflected in the number of calls made to retailers this year which is twice the amount in 2007.

Our bespoke software that drives our database enables us to look at the main disciplines within each of these market sectors and analyse the conversion rates from decision maker conversations to setting a quality meeting.

Here are the main disciplines that we used in this analysis:

The percentages next to each marketing discipline represent the breakdown of our calling on behalf of these disciplines since 1st January 2011. The remaining 13% of calling is divided amongst other specialist disciplines such as retail design and media buying.

We have summarised our findings in two ways:

1. By market sector – for example, if you’re looking to target financial services, which disciplines/services are most likely to have traction within that market, thereby making it easier for us to set quality meetings for you

2. By discipline/service offer – in other words, if you’re a digital agency, which markets are most receptive to your offer

Please don’t forget that this research is limited to our client base and to our calling in the markets listed above on behalf of the disciplines listed above and is by no means intended to reflect the entire market. However, it is based on some robust statistics from our database.

Another caveat is that the lines between disciplines are becoming more and more blurred; for example, in the table above, it states that 13.4% of our calling activity this year has been on behalf of digital as a discipline – this is only part of the story as most creative and integrated agencies will also offer digital as part of their overall proposition. The 13.4% refers to those exclusively digital agencies we represent.

The disciplines that are currently being well received in the clothing market are creative, digital, integrated and research. Any brand or retailer will be using all of these disciplines to help them understand their target demographic better and communicate with them via the most effective and relevant channels.

Financial Services: (includes banks, building societies, health insurance, fund managers etc)

This continues to be a tough market to penetrate as decision makers within finance companies prefer to meet agencies with in-depth experience in their market. However, this isn’t as important as it was 4-5 years ago and they now like to meet agencies with experience of other markets as this can bring alternative thinking to their marketplace.

The most successful discipline in finance is research as it is widely used by the major banks and building societies seeking to understand their consumers better. For example, tier two companies in this market are looking to take advantage of the criticisms being levelled at the big boys and are therefore looking to run customer satisfaction surveys.

We have also helped our clients secure business from smaller companies within this market, such as fund managers.

FMCG: (includes food and drink, personal care, pet food, household products)

Although this is difficult market to get through to decision makers (partly because a lot of agencies are keen to work with consumer brands and so voicemail is a common problem and equally because decision makers change jobs fairly regularly in this market) this continues to be a fertile market across all disciplines, particularly in digital, sales promotion, research and packaging design. Research is particularly important for early product and campaign development.

The increase in BOGOFs and price led promotions has been used by FMCG brands to sustain sales during the recession. This is reducing their profit margins and can cheapen the brand; customers get used to buying the product for less and then stop buying it when the price returns to its previous level. Brand owners are therefore looking for ways to promote their brands whilst at the same time boosting the value of the brand, thereby justifying charging a premium price. Thus, they are looking to work with agencies who can deliver value added or partnership campaigns/promotions.

FTSE 250/Top 1000 corporates:

These lists obviously have a mix of companies from all markets, so it’s quite difficult to draw any firm conclusions.

We often target these larger companies as we know that they have the right kinds of budgets. However, a fair percentage of these top 1000 corporates will have been covered off by the statistics from the other market sectors.

Integrated, creative, research and below-the-line (particularly DM and Live Events) seem to fare best in this market. We have also helped our clients win business from corporate/stakeholder communications in this market, helped by having an angle, such as sustainability.

Home: (includes consumer electronics, home improvements, gardening, white goods etc)

Generally a receptive market all round with all the disciplines doing well, particularly creative and BTL. The only exception in this market is research (due to our current research clients not prioritising this market)

IT/Telecommunications: (includes a range of businesses including Dixons, Ericsson, Garmin, Microsoft, Mitsubishi, Motorola and Nokia)

The service offers with the most traction in this marketplace are Direct Marketing, Channel Marketing and Research. Research is always needed in a highly competitive market and a lot of IT/Telecomms related products and vendors use DM.

Success in this area tends to be with the commercial/consumer end of this market rather than with hardware/software vendors for example.

Leisure: (includes bingo, cinemas, gyms, pubs, restaurants and attractions)

This has been a productive market for our clients over the past 2 years with a significant number of the wins we’ve generated for our clients coming from this sector. The core disciplines with most resonance in our study are all of them except PR (again, this is probably due to the fact that we haven’t done much calling in this market on behalf of our PR clients.)

A key discipline for this market not mentioned in our list in retail design consultancy who do very well in the leisure market, branding and designing bars, restaurants etc.

The biggest issue for the UK leisure market is how to capture a larger portion of people who are staying in England for their holidays, thus they are particularly interested in agencies who can help them build loyalty and get repeat visits, which will involve DM and digital marketing.

It’s really important for restaurants for example to stand out on the High Street with better branding and signage for example, thus the need for retail design specialists and leisure branding experts.

Professional Services: (including accountants, civil engineers, management consultants, solicitors and representative bodies)

The most productive calls in this market are on behalf of creative, BTL and corporate communications agencies. This is probably because traditional B2B firms such as Accountants still have a need for traditional paper based communications/sales tools such as brochures and direct marketing.

Retail: (includes department stores, online retailers, supermarkets, mail order, off licenses)

This is another productive market for our clients across most disciplines, particularly creative, below-the-line, corporate communications, digital and research. Again, specialist retail design consultancies (although not in our core list) do well in this market, unsurprisingly!

The main issues for retailers are the changing habits and behaviours of consumers, for example, UK shoppers have spent £31.5 billion online so far this year, which is up 19% on last year.

Retailers therefore need to rethink how to understand and communicate with their consumers, thus the constant need for research. They need to embrace multi-channel marketing such as digital, social media, m:commerce, thus why they are receptive to meeting digital and social marketing agencies. They also need to constantly improve the shopping experience such as pop up stores, interactive window displays, thus why they are receptive to seeing genuinely creative agencies.

Success in this market also tends to come from agencies with a specialism, such as POS or local marketing.

Travel & Transport: (includes airlines, airports, trains, hotels, tourist boards and travel agents). The most effective disciplines in these markets, resulting in us setting a quality meeting for our clients to attend are BTL and research.

Summary by marketing discipline:

Here is the same information but presented by discipline. I have extended the discipline list to include, for example, Direct Marketing separately from the overall BTL discipline, whilst still keeping BTL as a discipline. I have also added in others like retail design and packaging design

I have added in some additional markets such as Automotive and Building & Property for example where there was a significant trend. 

Some of you who have read my previous blogs will know that I like to have a bit of a rant sometimes. I wouldn’t say I’m necessarily a grumpy person, but with a fair amount of research experience over the years (ultimately earning me the nickname “Robbie Research”) I do like all business matters to be conducted with an acceptable level of care and attention.

A lack of professionalism when trying to win new business is one of the cardinal sins in my book. My previous blogs on customers for life and the difference between new business and business development will give you an insight to my way of thinking.

So picture the following scenario.

Before Christmas, I get an email from a “new business agency” – and I use the term in the loosest possible sense – offering me business development services for Alchemis.

Perhaps they sent it by mistake. I’ll just ignore it and we’ll say no more about it.

But a few weeks later a follow up email arrives – they’ve tried to get in touch with me but to no avail, surely I would be interested in their business development services for my company. This time, I couldn’t let it lie. I sent a polite reply to the sender which simply said “Gemma, please have a look at our website to see what we do as a company and then decide if we are likely to need a new business agency to help us.”

Surely this would do the trick – a two second check of our website would have shown the sender that we are, in fact, a new business agency ourselves. They could put me on their do not approach list and we will all be happy. But alas, my words fell on deaf ears as a while later I received another email from the same person – albeit this time into my junk email filter as I had marked the previous one as such.

Then last week I received yet another communication. Here is an excerpt:

We aren’t about sending over a high volume of poor quality appointments, we will create highly qualified meetings to make sure you are only meeting prospects that have a genuine need for your services.

Robert we would love to come and meet with you to discus in more detail how we can help you get in front of prospects and get you on track to fulfil new business targets. If you would like to arrange a date for a brief meeting then please do not hesitate to reply to this email or call me.

A few terms jump out of me from this. “Poor quality”; “highly qualified” (not) and “genuine need for your services.”

They also claim to provide a recording of every call they make – which is great except it is illegal unless the prospect is made aware that they are being recorded (and how would you react if you received a cold call from a company you didn’t know and were told they were going to record it)?

I am the only person at Alchemis who is not actively involved in a “sales” role of some description. But even I know that the key thing to any new business approach is to know a bit about the company you’re approaching (like, for example, what they actually do), listen to what the prospect is actually saying and only then are you in a position to know whether your services will be of use.

I’m not going to name and shame the person or company who keep sending me these unqualified approaches (despite my reply advising them to check what we do first) but as Mr T would say “I pity the fool” that would take them on to help with business development if this is an example of their attention to detail.

Companies like this give the more respectable agencies a bad name. And if the company in question happens to be reading this blog, please – for the love of god – practice what you preach.