Can you get blood from a stone?

Your Marketing and Sales functions are peddling as fast as they can. Marketing are busy running campaigns and events to create awareness of your brand and to create leads. Sales are busy pitching to prospects, proposing solutions and closing. Despite your earnest belief in the effectiveness of your Marketing and Sales organisations, your success is still largely dictated by the whims of the market. When expenditure in your product market is growing, provided you are "in amongst it" your business grows too. Equally, when the market contracts, so does your revenue. Nonetheless, growth in revenue is as possible in a flat market as in a buoyant one. A company that enjoys 10% market share need only extract an additional 2% market share to achieve 20% revenue growth in a flat market. Clearly for you to win, someone else has to lose, but how? Sales methodologies abound. Most are very good, and to the extent that the most appropriate ones have been well implemented within your company, they have significantly improved your account planning and sales execution to a measurable degree. But you know you can get more out of the market. In this paper I’ll spell out a framework which explains how the Sales and Marketing functions of the best run companies align and structure their activities to prosecute the market opportunity better than their competitors, without abandoning their proven sales methodologies.

MathMarketing™ How to make your sales & marketing count for more

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MathMarketing - Funnel Summary Funnel summary.doc 20 May 2003

especially in four areas: Marketing and sales are communicating different messages Leads generated by Marketing are not well qualified and are ignored. Marketing campaign planning ignores the sales process. the problem has already existed for six months or even more. and the confused aggregate. and Positioning.Funnel Summary Funnel summary. PR. The buying process is ignored. By the time the sales forecasts are looking flat. events. Having said that. we have found a number of common inhibitors to optimal effectiveness.WHERE DOES THE PROBLEM LIE? Four anchors Our customers (and their customers) have taught us a great deal. 4. Four of these relate to the way Sales and Marketing plan the execution of the strategy. seminars. We call these the “four anchors” because any one of them on their own can slow the whole sales / marketing process. In consulting to large and small companies in the IT&T (Information Technology and Telecommunications) industry we have completed over 140 strategy assignments at the time of writing. Tactics are arbitrary. Sales plan their own campaigns which ignore the marketing process. we have found that either the absence of clarity or the absence of conviction regarding three aspects of an organisation’s core strategy will inevitably compromise the ability of staff to implement it. often bare little resemblance to the process of the business buyer. Communications tactics (including advertising. The same customer is often contacted by both Marketing and Sales. newsletters etc) are selected for historical reasons. The indicators are way too late. 1. 3. the sales processes.doc 20 May 2003 . but this paper has been written for those who are committed to their strategy and want to execute it optimally. In this work. the functions of Marketing and sales are not aligned. and the research interviews with business buyers of products and services conducted on behalf of these customers. What about the bigger issues? The core strategy is fundamental to get right. 2. Page 2 MathMarketing . Purpose and ideology Target market. Marketing and Sales are on different planets. Despite their individual effectiveness. The marketing processes.

and task these tactics narrowly to achieve the graduation of this phase. Measure results and adjust as required Measure actual results. Plan a single. not some broader. and adjust the tactics or their implementation as required. benchmark these results against other.Funnel Summary Funnel summary. I’d like to discuss another need with you”. and orchestrate that progression en masse. Consciously increase or decrease the number of prospects targeted in the early stages of this progression over time to ensure resources are optimally deployed. identify which phase in the mapped-out progression presents the greatest opportunity for improvement.So what is needed? You need a framework which allows you to: Be clear about the progression you are asking the buyers as a group to make. but loosely defined marketing objective like “brand awareness” or sales objective like “create opportunities”. then a third and so-on. integrated Sales and Marketing approach to the market. from one clearly articulated belief to a second.doc 20 May 2003 . Develop a plan to achieve that momentum Select the optimal tactics for each phase. beginning with “who are you anyway” and ending with “that worked well. Model realistic success based on well-established benchmarks Measure and track the actual success of the coordinated efforts against those benchmarks Using these results. 3. for set up. Confidently select the optimal tactics and discard others. Dimension this progression to show how many prospects you expect to successfully graduate from each phase to the next. The visualisation used to describe this mass progression with loss at each stage is a funnel – the MathMarketing™ funnel. 2. allowing for realistic success rates for each phase and the time it would take to achieve this progression for each phase. Identify what optimum momentum can look like for you: Map out in detail the progression you wish to achieve in the mind of the prospects as a group. Introducing MathMarketing™ MathMarketing™ is an approach to acquiring clients comprising three steps: 1. Page 3 MathMarketing . and those which must be done every day / week /month. like companies. Break these tasks down into those required once.

The funnel does not reinforce your sales methodologies. You end up with fewer prospects at the bottom than at the top because prospects fail to progress from one phase to the next." "I have a problem which members of this product category can probably solve. We have found it useful to describe these phases in terms of the progression you are asking the buyers to make during each phase. and I am pleased." "Your solution worked as promised." "I can see how your proposed solution might meet my needs and provide the payoff I seek. and you seem to understand that problem. There is no relationship between the sales funnel and the buying process of a typical business. where the leads generated are evaluated agains some established criteria. and traverse more phases than is implied by a simple funnel. In even the most effective sales and marketing organizations." "You and I have a firm agreement binding us both." "I have further needs I am interested in discussing with you. the total " leakage" will usually amount to more than 75% of the total prospect pool that they began with. and can articulate the payoff available to me for addressing this problem. From the research used in over 140 strategy projects conducted in Australia. Marketing’s role is to achieve outcomes not associated with the sales funnel. the sales funnel has holes." "I have a clearly defined need (problem or opportunity)." Page 4 MathMarketing ." This is an internal-only phase.The “leaky” funnel Suspects The concept of a sales funnel is well understood and widely used in most sales organizations.doc 20 May 2003 .Funnel Summary Funnel summary. In using the funnel as a metaphor. but it has many weaknesses: The journey from the top to the bottom can often take longer. which exacerbates the misalignment between the Sales and Marketing functions." "Your solution is the only one I want to consider." "I can see how your proposed solution would work in my organisation. we need to be mindful that unlike a real funnel. yet the planning in most organisations is about dealing only with those who remain (the 25%). MathMarketing Position in category Identify problem Qualify & Prioritise Establish Credentials Define Need Propose Solution Prove Concept Defeat Competition Obtain Mgmt Approval Obtain Contract Deliver Grow What do we want the prospect to think when this phase concludes? Prospects Best few "You are one of the companies I recognise as members of this product category. "You are a credible provider in this product category. The basic sales funnel is a good starting point towards understanding the MathMarketing™ funnel. and I understand something of your unique selling proposition." "My upline approvers and other stake-holders support my recommendation to accept your proposal. as outlined in your proposal. The funnel leaks. we have found there to be between 9 and 12 discrete phases involved in the journey from the top of the funnel (where the vendor is unknown to the prospect) to the bottom (where they are a satisfied customer returning for more).

The results enjoyed by a direct marketing campaign can vary from literally 0% to 100%. what tactic or tactics will be most effective in having 500 of them recognize they have a problem that we and other members of this category could probably solve. take all the tactics used by your sales and marketing organisations today. you need to understand how many you need to work through the funnel to meet our objectives. Lets first lay the whole picture of the math of marketing out on the table. This is the Math. assuming that 400 of the 500 meet our qualification criteria: “With 400 prospects acknowledging a problem that we and others could probably solve. Commencing with 5000 names. In the fictitious example below.doc 20 May 2003 . when the process is broken down into the MathMarketing™ phases. and understand something of our unique selling proposition?” And so on to the bottom of the funnel. The “Math” of MathMarketing™ Most marketers can tell you what results should be expected from a direct marketing campaign (2%). and that we understand this problem?” Then. a prediction should be made regarding what percentage of those who have progressed to the current stage will successfully be promoted to the next. how can you best progress them from one belief to the next? To begin. I’ll get to that soon. I am further predicting that we will successfully have 50% of these (750) acknowledge that they have a problem. Progressive leakage For each phase in the MathMarketing™ funnel.Mindful of what you want the prospect to think at the conclusion of each phase.Funnel Summary Funnel summary. And so on down the funnel resulting in 50 successful deliveries. and vary widely from the oft-quoted 2% more often than they meet it. Yet these “proven truths” are neither proven. what tactic or tactics will be most effective in having 1000 of them recognize us as a member of the product category?” Then: “With 1000 prospects recognizing us as a member of the product category. I have estimated the predicted success for each phase in the MathMarketing™ funnel. Further. Page 5 MathMarketing . an assessment of recorded results reveals useful insights. nor truths. and most sales people can tell you their closure rate (perhaps 30%). Beginning with a clean slate. what tactic or tactics will be most effective in having 200 of them recognize us as a credible provider in this product category. of MathMarketing™. Before the tactics are crafted though. I have forecast to be successfully positioned as a member of the category with 30% (1500). the questions to ask become: “With 5000 prospects identified. and that we seem to understand. and set them to one side.

should re-enter the MathMarketing™ funnel at the “Define Needs” phase after having been subjected to the standard yield for this phase.doc 20 May 2003 . Note that there is no assumption yet that I can successfully identify and define a new need which warrants a remedy. the alternative to leaving this leakage to evaporate is to “recycle” it. customers who successfully graduate the “Grow” phase. plus a third year. I overly simplified the funnel by assuming each phase took no time at all. Once I allow for the time required to successfully progress the required population from each phase to the next. At the risk of stretching the metaphor. This “leakage” is usually left on the floor until it disappears (or “evaporates”). Dealing with the leakage Earlier in this paper I mentioned that the funnel leaks. prospects successfully graduate. they would be pleased to discuss it with us.Funnel Summary Funnel summary. only that were one to emerge. A repeat dose? I have described the advance sought from the “Grow” phase as a customer who presents as “ready to discuss a new need”. the funnel can be more accurately dimensioned. The MathMarketing™ funnel is no different.495 $0 $0 $0 $0 $0 $0 $0 $0 $2. Page 6 MathMarketing .495 Not so fast In the previous example. It has been our practice to look at the first two years broken down into eight quarters.Math Marketing Position in category Identify problem Qualify & Prioritise Establish Credentials Define Need Propose Solution Prove Concept Defeat Competition Obtain Mgmt Approval Obtain Contract Deliver Grow Yield 30% Q1 1500 Q2 0 Q3 0 Q4 0 Q5 0 Q6 0 Q7 0 Q8 0 Yr3 0 Total 1500 50% 750 0 0 0 0 0 0 0 0 750 80% 600 0 0 0 0 0 0 0 0 600 30% 180 0 0 0 0 0 0 0 0 180 75% 135 0 0 0 0 0 0 0 0 135 95% 128 0 0 0 0 0 0 0 0 128 80% 103 0 0 0 0 0 0 0 0 103 80% 82 0 0 0 0 0 0 0 0 82 80% 66 0 0 0 0 0 0 0 0 66 80% 53 0 0 0 0 0 0 0 0 53 95% 50 0 0 0 0 0 0 0 0 50 75% 37 0 0 0 0 0 0 0 0 37 $2. but many also fail. At each phase. Accordingly.

doc 20 May 2003 . each quarter. Page 7 MathMarketing . The effect of recycling prospects is enormous. My strategy for this prospect. and all others at the same stage.775 Figure 1 .075 $937 $938 $960 $2. Clearly this is a more profitable approach.397 $8. should be to provoke a new need which I can earn the right to solve. and one less likely to produce the situation that prospects get “burned” by warming them up before I am ready to deal with them. The MathMarketing™ funnel which emerges as a result of these multiple iterations might look something like the following Weeks 4 Math Marketing Position in category Yield 30% Q1 521 Q2 460 Q3 259 Q4 375 Q5 353 Q6 349 Q7 348 Q8 305 Yr3 398 Total 3369 4 Identify problem 1 50% 260 222 124 188 177 175 174 153 208 1680 Qualify & Prioritise 3 80% 208 147 99 164 137 140 140 122 184 1340 Establish Credentials 2 30% 63 44 30 49 41 42 42 37 55 402 Define Need 1 75% 0 47 69 50 48 52 52 51 115 484 Propose Solution 1 95% 0 45 65 47 46 50 50 49 109 460 Prove Concept 1 80% 0 36 52 36 36 40 40 39 88 368 Defeat Competition 2 80% 0 29 39 28 30 33 31 31 72 293 Obtain Mgmt Approval 2 80% 0 23 31 21 24 26 25 25 58 234 Obtain Contract 4 80% 0 18 21 17 21 20 20 20 49 186 Deliver 6 95% 0 17 17 16 21 19 19 19 48 176 Grow 75% 0 0 13 18 12 14 15 14 43 129 $0 $866 $826 $776 $1. the same number of prospects can produce very similar revenues.The MathMarketing™ funnel indicates quarterly measurable objectives for progression from each phase. All those who leak from phases “Define Need” and below should be recycled back to “Define Need”. The recycling strategy should pick up leakage from all phases up to and including “Establish Credentials” and begin the campaign again endeavouring to “Position in Category”.The further a prospect travels down the funnel. it means I had insufficient affect. A second attempt reinforces the message I attempted to convey on the first attempt and will cause some of the remainder to advance to the next phase. Tweaking for resource load By phasing the introduction of the 5000 names into the top of the funnel rather than putting them all in at once. the greater has been your investment to get them there.Funnel Summary Funnel summary. Failure to achieve graduation from a phase after one attempt does not mean I had no affect. but with a significantly more efficient sales force.

Funnel Summary Funnel summary. So.This iterative planning makes clear the number of progressions I need through each phase. Only now. the funnel leaks. Rather than asking the question "what should we do with our event marketing?". Failure in the Define Needs phase is more common than might be expected. Defeat Competition etc) are usually attributable to one of only three causes: the need did not justify the solution offered. the question should be "what would it take to get 260 prospects to identify problems this quarter out of the 521 who have currently established their interest assuming an average lag of 4 weeks?". the solution offered did not meet the need or provide the payoff. Either way. It dimensions clearly what I must achieve. it is usually easier to set them aside and begin from afresh. Or you can have a meeting with a prospect but not get off first base. It can leak at every stage. Optimal tactics for optimal momentum The tactics necessary to achieve the objectives set for each phase can now be identified. the leakage strategy is to recycle all failures from these first phases back to “Establish Problem”. Failure at later phases (Propose Solution. even Establish Credentials. Whilst there may be good logic behind the choice of the current communication tactics. Many sales calls end with a polite “thanks. or have it cancelled and not rescheduled. The tactics need to be selected to deliver the narrow objective of the phase.doc 20 May 2003 . with this clarity. Put them back in the pot and cook them a little more. yet recognising that later phases follow and the prospect should graduate one phase ready to graduate the next. each quarter. The leakage strategy for all Page 8 MathMarketing . should I consider how to achieve this outcome. You can contact a “hot” prospect and still be declined a meeting. Most leakage (failures) from any of these first three phases can be attributable to one thing: you have failed to stimulate concern about a problem that warrants discussion. Planning for failure MathMarketing As you know. Treating leaked prospects who have come this far as strangers is wasteful for you and discourteous to them. nothing can happen until you have another need you can have a go at solving. but no thanks” because no burning need has been established. or an alternative solution met the need more fully.

are a great way to get back into previously unyielding prospects. Assuming that the leakage from these lower-funnel phases comprises a reasonable population.prospects who fail at the Defined Need phase or any phase that follows is therefore the same: define a new need. Prospects at this point know you are a credible provider and that your representative is also OK. Initiating a new sales call is fairly low yield (“didn’t we cover this last time?”). not your ability to address them. especially if the speaker has some professional standing. but not entirely without merit. There are some tactics which can help. Presentations.doc 20 May 2003 .Funnel Summary Funnel summary. Page 9 MathMarketing . preparing special presentations or white papers which create deeper clarity about a problem and endeavour to tease out its implications can yield significant results. The task with these presentations and white papers is to sell the problem and its implications.

mathmarketing. its challenges.Funnel Summary Funnel summary. Nonetheless. well researched view of the process used by successful sales people to effect progression via discrete and pre-defined advances in the mind of a business buyer.doc 20 May 2003 .ACKNOWLEDGEMENTS No idea is entirely original. you are free to use this document without the need to seek www. your successes and failures and the way this paper has been crafted would be welcome. Of what I presented in this paper. Any feedback regarding your business. its articulation and presentation. Hugh Macfarlane Managing Partner MathMarketing PO Box 6146 St Kilda Road Central Melbourne VIC 8008 Australia +61 3 9690 7600 hmacfarlane@mathmarketing. you acknowledge MathMarketing as the source and that you use its correct name (MathMarketing™) in referring to the process. granular sales/marketing process that ought to be forecast and measured. and in some workshops I organised in 1997. and MathMarketing™ is no exception. Our only condition is that every time you do. Neil Rackham from Huthwaite Inc who through his book “SPIN Selling” presented a clear. The remainder came from some other smart people who share our belief that an idea is not valuable until it has been beaten about a bit. Amongst this last group I include: Mary & Mike Molloy from TRB consulting who through their book “The Buck Starts Here”.com Page 10 MathMarketing . Alice M Tybout and Brian Sternthal from Kellogg University who in “Kellogg on Marketing” stripped the fluff from market positioning to leave a believable and usable core. and their clients taught us another third. and may reference it in other works. then shared widely. Accordingly. MathMarketing retains full copyright to the process. we believe any belief only holds value if it is shared widely. first introduced (to us at least) the idea of a progressive. our clients taught us one third. I am interested in your success. I thank both for their contribution and for letting us learn with them.

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