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One customer who purchased a lot of items six months ago, for example, now purchases relatively little. “How do we talk to them and what do we offer them?” Samuels asked.
He answered his own question this way: “We were able to identify them by doing deep-dive analytics to uncover highly differentiated groups within our customer set. And we’re able to recognize and speak to them in a voice that is relevant.”
Further refining its segmentation with analytics, the Best Buy for Business team identified seven discrete groups of business customers within the innovative adopters and thrifty followers.
Analytics dictated whether customers and prospects received more promotion messages, for example, or
content-related messages with information for customers, mailings with a strong interactive component with a quiz or a webinar or live chat with an expert.
BY CAROL KROL
WHEN CONSUMER electronics retailer Best Buy Co. introduced its b-to-b unit four years ago, it did not have a business marketing strategy.
The $40 billion company lacked institutional knowledge when it came to talking to business customers, and there was a structural problem, too. The Richfield, Minn.- case study based company had multiple
purchasing systems—point-of-sale at its 1,300 retail stores, telesales, a Web site ( BestBuy.com, and later a businesser site, bestbuyforbusi-ness.com), a proprietary internal sales database and a CRM platform. The different systems meant that even if Best Buy managed to identify its business customers specifically, it was almost impossible to have a clear and comprehensive view of them. This made lead-generation activities difficult.
“The challenge was none of those systems talked to each other,” said John Samuels, the director of business-to-business at Best Buy for Business. “You can imagine the challenge of trying to understand a business at 123 Main St. in Chicago. It was impossible to understand that customer, and the chances of being irrelevant to them significantly increased.”
“It’s not an unusual problem,” said Dave Frankland, a direct marketing analyst at Forrester Research. He said the challenge to having a centralized view of the customer is the way organizations are typically structured. Silos tend to exist either organizationally (by department or function) or by channel, where companies often have separate databases for online customers, store customers and call center customers, for example.
In order to better understand its business customers, Best Buy’s first step was to study the market.
“We started at the ground level with a marketplace segmentation study about 18 months ago,” Samuels said. The study gave Best Buy for Business five “segments” or types of potential customers. In the end, the company decided to focus on two of those: “innovative adopters” and “thrifty followers.”
Innovative adopters (customers who adopt technology early and understand how technology can give them a competitive advantage) bought two to three times more products and services for their businesses than each of the other four segments while thrifty followers, which accounted for about 30% to 35% of the overall market, purchased less than 15% of Best Buy products. (Samuels describes thrifty followers as the volume, or mass marketing, target.)
The next step was to merge all the
data being collected by the company through its multiple channels into a single view of the business. It was a formidable task.
Together with Engauge Direct, a direct marketing agency, Best Buy for Business began to build a “ business data mart” to use for customer analytics focused on its business customer. The process took several months, but once the database was built, Best Buy for Business finally had a multidimensional, compre-
hensive view of its business customers and prospects.
“The build-out of all this ended last October, and now the processes are fully automated where we push the data down to the data mart and then we’re able to do analytics, which helps us target customer groups,” Samuels said.
That intelligence now helps Best Buy for Business pick the right messages for each customer segment in its two target categories and
On any give day in a single channel, retail, Best Buy for Business can identify 16% of those walking into the store and making a business purchase.
“Businesses are coming in to Best Buy,” Samuels said. “We just haven’t had good processes in place to recognize their needs in the way we can now.”
Janet Rubio, president-direct at Engauge, said this is a new style of lead generation for marketers that is built on a holistic approach to the database.
Best Buy, page 8
Maketers need a more systematic
approach to demand generation
HOW ARE MARKETERS approaching their lead- acquisition or for building awareness. Of the 212 generation programs these days? What’s b-to-b marketers who responded to a survey we working online and off? These are some of fielded last October, 85% said they use e-mail in the questions BtoB recently put to Laura Ramos, a their marketing mix. Of these, only 18% said they VP at Forrester Research. found it highly effective for building brand. In con-
BtoB: Webinars and white papers are among the trast, 56% said that they felt e-mail was highly
most popular b-to-b lead-gen tactics. Will it always be effective for communicating with their existing
such or will they become less effective over time? customers. If you establish a relationship with a
Ramos: Webinars and white papers play an im- prospect or customer, then e-mail is welcome com-
portant role in educating prospects, so I can’t see munication, not spam.
them going away anytime soon. Because Relative to other direct marketing ap-
a certain segment of people learns best proaches, e-mail can be less expensive to
by listening and others by reading, it is execute. In the same survey, we found
important that b-to-b marketers consider b-to-b marketers spend about 9% of their
both when planning content delivery. program budget on e-mail. While this
However, webinars and white papers may sound like a lot, their productivity
should be used as part of integrated mar- with e-mail typically outdistances that of
keting programs, not as standalone lead- physical mail, broadcast or other direct
generation campaigns. They need to fit Q&A messaging approaches. As marketers
properly into a program that uses a variety LAURA RAMOS, move from list rental to building and
of media to build brands, generate aware- VP, principal maintaining their house lists, this produc-
ness and engage prospects in a dialogue. analyst, Forrester tivity should only increase as they are bet-
Too many b-to-b marketers use webinars Research ter able to target their e-mails to specific
and white papers as their primary lead- segments.
generation approach and fail to build other interac- Finally, e-mail is measurable and this makes it
tion opportunities around them. They assume if more useful than other direct or indirect approach-
prospects download a white paper or attend a es. As e-mail marketing analytics and reporting
webinar, then they are immediately qualified for a gain broader use, b-to-b marketers now want to
sales call. know, “How do my click-through rates compare to
A better approach is to use webinars and white others?” Rather than focusing on benchmarks,
papers to engage buyers who are further along in b-to-b pros use A/B testing to run side-by-side
the buying process; who have already opted into a campaigns and understand which variables move
virtual conversation through e-mail clicks, Web site the needle on how buyers and customers respond
visits, reviewing product options; or by answering to their e-mail correspondence.
short surveys. These interactions help marketers BtoB: How successful are marketers in filling the
understand whether buyers are qualified and what pipeline with lead-gen tactics given that there seems
they need to advance their investigation of prod- to be an ever-growing number of constituents
ucts or solutions. By studying its buyers’ journey, involved in the decision-making/buying process?
CA found that inviting prospects to attend a webi- Ramos: I’m seeing a mixed bag of results
nar helps move them from consideration to selec- because b-to-b marketers still worry too much about
tion. They use webinars to persuade potential buy- generating larger lead volumes and not enough
ers to select their products. They don’t invite early about building quality demand. B-to-b marketers
buyers to webinars when white papers, short whipsaw between tactics that appear to work one
videos and customer case studies better educate quarter but fall flat the next. What they need is a
them about what they have to offer or how buyers more systematic approach that sees demand gener-
could benefit from using their products. I think oth- ation as the front end of the process of acquiring,
er b-to-b marketers have much to learn from CA’s closing and helping customers to adopt products.
example. Balancing lead generation with activity to build loy-
BtoB: E-mail is at the top of the list for b-to-b mar- alty and adoption will let b-to-b marketers learn who
keting campaigns and has been for some time. Why their best customers are, how they became their
do you think that remains to be the case? best customers, how they journeyed through the
Ramos: E-mail is popular because it continues a buying process and how to find more like them.
conversation, it is relatively inexpensive and mar- B-to-b marketers don’t have an unending sup-
keters can measure whether or not buyers interact ply of potential candidates available to them, so
with it. In b-to-b, e-mail marketing is essential for they need to nurture buyers and engage a broader
continuing a prospective buyer conversation or for number of principals in the purchase process.
communicating with customers. Our research Instead of trying to find new ways to reach
shows e-mail is not as effective for new customer untapped buyers, b-to-b marketers need to put the
process, technology and discipline in place so they can track prospect interactions over time, assess their level of engagement and continue to dialogue with them by offering relevant content and information. Instead of approaching each interaction as a way to qualify a prospect, b-to-b marketers need to get to know prospects better, understand their needs and be willing to give a little more without expecting something in return.
BtoB: Are marketers using social media for lead generation? Have you seen any particularly interesting, successful examples?
Ramos: Of the marketers responding to our survey, roughly a third are experimenting with blogs, podcasting, social networks and the like. Blogs lead, and emerging approaches like wikis, communities, user-contributed content, virtual worlds and viral marketing lag. Most of those marketers trying out social media tell us that it is too early to tell how these experiments will pay off.
I think b-to-b marketers who experiment now will learn two important lessons: whether their buyers are willing to engage with social technologies and what it takes to use social media to truly build community, not just broadcast messages.
RSA Security and Avaya are on the right track here with their blogging. Both use blogging to build community and demonstrate thought leadership. They don’t sell their products there, but talk about issues that are important to security-minded and support professionals, respectively. RSA takes it a step further by integrating podcasting into their blogging effort and making both blog posts and podcast summaries available to readers through RSS feeds or e-mail newsletters. I use RSA as an example often because they integrate their marketing well and they focus more on providing really relevant, insightful information than just putting their message out there.
BtoB: What are the obstacles to successful lead-gen programs? How can marketers overcome these?
Ramos: The three biggest challenges I see to successful lead generation are 1) inconsistent processes for scoring/qualifying leads, following up with sales, nurturing those not ready to buy and monitoring marketing’s impact on the pipeline; 2) underinvestment in technology and process to make this more efficient; and 3) a lack of focus on the right kinds of measures and monitoring. Instead of counting the number of marketing-qual-ified leads gained from executing a tactic or event, marketers need to focus more on figuring out how many of these lead close as deals, what separated these leads from the rest and how do they continue the dialogue after the deal closes to help customers adopt and use of their purchase throughout their community of internal users and business partners.
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