BESSEMER CLOUD COMPUTING LAW #7: Online Sales/Marketing - A Core Competency
You’re a cloud business, so by definition, your sales prospects are all online. Savvy online sales and marketing is a core competence (sometimes the only one) of every successful cloud business.
Numerous studies show that your customers are now doing most of their primary research online, and this should not surprise you. As a consumer, you wouldn’t imagine buying a car, making an offer on a home, planning a vacation, or completing other large purchases without doing some research online. The same is now true for executives at your target customers. You should therefore be aggressive in marketing to them online.
This is a clear example where business-to-business (B2B) marketers need to learn from their business-to-consumer (B2C) counterparts. The most innovative B2C companies are lead generation machines, leveraging social media marketing, search engine optimization (SEO), viral marketing, search engine marketing (SEM), email marketing, and other technically-advanced methods. Yet many B2B companies don’t have a clue. The incumbent technology leaders like IBM, Oracle, and SAP, have done very little in online marketing, and thus have given their smaller challengers a huge opportunity. Whether they use an automated product like Eloqua or a team of marketing analysts and spreadsheets, online marketing and demand generation is a “must have” for cloud companies.
In this new era, the creative elements of marketing are becoming secondary and quant jocks and analytical wizards are starting to take over the CMO and VP Marketing positions. At the marketing executive’s fingertips should be detailed reports showing pipeline sources, costs per lead, funnel conversion rates by stage, costs per acquisition by source and campaign, effectiveness by channel, and so on. If you are the CEO or a Board member, you should review these reports closely and make them the basis for assessing marketing effectiveness and performance.
The most advanced marketing executives are also starting to embrace social media and to do multimodal attribution analyses. Customer and prospect conversations are no longer defined by website text, email messages, and sales discussions. Twitter, Facebook, LinkedIn, Pinterest, blogs, and dozens of other social media tools constantly facilitate discussions about your market, your competitors, and likely your company and product. You need to get into position to monitor and help define these discussions, and the savviest marketing teams will use this to their considerable advantage.
A strong head of online marketing will also be able to give you detailed demand generation forecasts based on different budget levels. It’s important to understand the natural limits of organic traffic as well as the slope of the supply curve for each of your various paid lead sources. Your blended cost per lead may be very attractive, but if a large portion is organic/free traffic and your marginal cost of an incremental paid lead is quite high, then you may not be able to scale marketing spend in an efficient manner. If SEM is a lead source, you should study the quantity and pricing of your main keywords and do burst testing to validate the assumptions before dramatically increasing budgets. If these data are good, highlight it to your prospective investors. We love to find businesses with 6 month CAC paybacks and the capacity to absorb 10x more marketing spending. If it’s bad, you don’t need to highlight it – but you better understand those limits and how you can address them over time.
On the softer side of marketing, it’s grade school all over again and you want your company to run with the cool kids. Ecosystem matters now more than ever, and the right partnerships can really elevate your company and your brand through positive associations. Try to align yourself with the best-of-breed leader in each of the adjacent segments to you and partner with them, host hackathons together, use each others’ products, and cross promote as much as possible. However, don’t over think the relationships and try to force channel deals too early in the life of your company. Informal co-selling and referral deals are much less effort and typically result in equal effectiveness in the early stages. Therefore, it is still the case that most cloud businesses have to be comfortable with the fact that they will live or die by their ability to sell directly.
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