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News & Views from Alchemis

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Call us for a chat on +44 (0)20 7836 3678 or email Amanda Francis


Why personal interaction is vital in generating new business

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:

Chart: Changes in the effectiveness of B2B marketing tactics

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:

Chart: B2B marketing priorities vs. challenges

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:

Off-Line On-Line
Advertising
Direct Marketing
Telemarketing
Events/Exhibitions/Tradeshows
PR
Email Marketing
Online Advertising
SEO/PPC
Social Media
Online PR

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.

Size of opportunity Average number of face to face meetings
£1,000-£10,000 1
£11,000 – £25,000 2
£26,000 – £50,000 2
£50,000 – £100,000 2
£100,000 – £200,000 2
£200,000+ 3

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.

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