Best-in-class marketers have evolved from stuffing the Sales Funnel with leads to Outcome-Based Marketing. This change has served as a driving force to align and integrate sales and marketing, strengthening an organization’s go-to-market execution.
Conventional marketers have traditionally focused on leads, and specifically focused on lead quantity over lead quality. Unfortunately, there are numerous issues with this approach resulting in a “lose-lose” relationship between sales and marketing. Typically, marketers are unaware of revenue targets or the sales process, and are not involved in the sales process once a lead is passed to sales.
The next evolution that occurred is when B2B marketers evolved to “Performance-Based Marketing.” Performance-Based Marketing requires marketing’s involvement until a qualified opportunity is generated–far beyond the generation of a lead. Performance-Based Marketing usually focuses on a metric such as a qualified opportunity or even a trial. In this model, marketing is aligned to the sales process and there is clear terminology, roles, responsibilities and integrated systems and processes. Furthermore, marketing, or specifically, the field marketing or market development function, is part of the sales process. The focus of the function is to create an opportunity that will close, as opposed to generating a lead.
Performance-Based Marketers typically cast a wide net so that no potential prospect is missed. The issue with this approach is that it frequently creates a large leaky funnel with low conversion and success rates . Another downside to Performance-Based Marketing is that it is a drain on resources. Today‘s digital world has created a huge potential negative — unsatisfied prospects and customers have a forum to communicate the failure of a company to deliver on their brand promise—either through the demand creation or onboarding process.
Outcome-Based Marketing moves the marketing needle once again as the focus is not on a lead nor even on a deal. Outcome-Based Marketing is all about targeting customers with a high probability to realize the value proposition that an organization offers. In addition, these customers will be successful, continue to use the solution, display a high level of customer satisfaction and be net promoters.
Using the health care example, the underlying premise of Outcome-Based Marketing is that an organization is better off with fewer but better aligned and better faring patients taking one’s medication. In this paradigm, a marketer’s job changes to include finding the right patients, successfully starting them on the right products for their specific clinical/behavioral profile, enrolling them in the right drug and lifestyle programs, and substantiating compelling outcomes claims. This approach is different than simply trying to get as many patients as possible to try the medication and letting patients decide whether the medication is a good match or not. This approach is typically characterized by high attrition rates.
Outcome-Based Marketing does not mean that marketing will only invest in prospects that that will become successful customers. It does mean that the lens or Target Account Profile that marketing uses to justify resources will directly map to a profile of a successful customer. This profile is either based on the use case for new solutions or is based on cluster analysis of an existing customer base for existing solutions. What this means for marketers is that the focus has to move from generating high volumes of “leads” to focusing on engaging with prospects that map to the Target Account Profile – with a high probability of becoming a successful customer.
Outcome Based Marketing is like fishing in a stocked barrel. What this means is that the probability of catching the fish you want increases dramatically. More work is required upstream in the process:
- Knowing what one’s product does
- Knowing whom it is ideally suited for
- Getting a meaningful, relevant message infront of the prospect when they want and in a format they desire to consume
- And use a communication platform preferred by the prospect and optimized for their device of choice
In short, while the data needs for Outcome-Based Marketing are much greater, they are also correlated to a higher level of financial success.
Digital Markers Are Fuel for Outcome-Based Marketing
Digital marketing empowers marketers to understand the past and present behavior of customers and predict future behavior. In addition, digital marketing allows marketers to apply that knowledge in a way that influences one’s customers’ interactions. Any behavior — be it a tweet, a share, a visit, a comment, a transaction, an abandoned basket, the opening of a new account- whether recurring or one-time action –needs to be captured, stored, retrieved and applied as part of a holistic view of the relationship.
As time marches on, these independent digital markers can be assembled – much like a puzzle- to form a digital blueprint that can set the stage for securing a long-term customer relationship. Without action or the combination of historical and time-sensitive information, structure and unstructured data, the moment to provide the greatest value to customers will be lost.
Outcome Based Marketing – More Information
The digital marketing world relies on the ability to access to a wide variety of information including historical repositories and digital flows that stream across social, mobile and other networks. Information variety (structured and unstructured), volume, data at rest and data in motion are challenges for many systems–transactions, tweets and geo location are separate but must be combined to form a complete understanding of an individual, situation or opportunity.
Digital marketing is a conduit for timely information. This is because it generates information from a wide variety of sources that aren’t always connected at the same time. In a digital world, because data can be transmitted intermittently rather than in a steady stream, digital marketers can connect data across sources such as mobile, social, web and transaction history:
- Mobile – with two billion people worldwide using smartphones and moving from location to location, they are both a source of information and a destination for interaction with customers as they shop.
- Social – this is the key to listening to one’s customers across blogs and social networks such as Twitter and Facebook. Customers ‘follow’ and ‘like’ but also post about their preferences, thereby establishing an online persona.
- Web – searching, browsing, viewing, commenting and purchasing establishes a trail of behaviors.
- Transaction history – customer buying patterns and interests, as well as their responses to previous marketing, predicts future response rates.
Of course, all of the information in the world isn’t as valuable as the right amount of information delivered to the right person, in the right context, in the right format, through the right channel, and at the right moment. This is what matters most. Digital marketing assumes a real-time and right-time capability to move, store, retrieve, interpret, and act on information. Because the best digital marketers create and consume information that is opportunistic, that data has to be available when events dictate.
Outcome Based Marketing Feeds Big Data and Analytics
The appearance of the data scientist on the B2B and B2C business scene reflects the fact that companies are acknowledging that the variety and volume of data is overwhelming. Decades have been dedicated to technological advances in databases, data warehouses, data marts, decision support, business intelligence, and analytics. However, organizations struggle to turn that data into information and to make decisions in a timely manner which positively impact the organization’s financials
The title of data scientist is a relatively new term/title as it was coined in 2008 by D.J. Patil and Jeff Hammerbacher. These individuals led data and analytics efforts at LinkedIn and Facebook. Data scientists focus on solving complex data problems through employing deep expertise in mathematics, statistics and computer science. Data scientists use the ability to find and interpret rich data sources, manage large amounts of data, merge data sources together, ensure consistency of data-sets, create visualizations to aid in understanding data. They build mathematical models using the data to document, interpret and predict behavior. It is estimated that thousands of data scientists are already working at both start-ups and Fortune 1000 companies. Specifically:
- Gartner predicts by 2015, Big Data demand will reach 4.4 million jobs globally
- The New York Times recently ran a story, “GOOD with numbers? Fascinated by data? The sound you hear is opportunity knocking.””
- Harvard Business Review declared, “Data Scientist: The Sexiest Job of the 21st Century”
The Net: Outcome-Based Marketing
Big Data, analytics and digital can play a huge role in Outcome-Based Marketing. Target audiences can be reached in real-time via content that can be created, stored, retrieved, analyzed and applied to provide relevant, personal information at the right time through the right vehicle and in the right format. The goal of Outcome-Based Marketing provides insights into a consumers’ buying behavior, and allows marketers to influence and predict purchases and success. Doing so creates a stronger and more successful longer term, and profitable relationship with consumers.
Outcome-Based Marketing lasers in on the bottom of the sales funnel while Conventional Marketing targets feeding the top of the sales funnel. More specifically, Outcome-Based Marketing concentrates on a blueprint of the exact persons who will be successful using an organization’s solution. This first step in Outcome- Based Marketing forces the entire organization to be clear on a specific use case that describes who would use the solution and in what environment, the value it provides and the differentiation between alternatives. Most importantly, Outcome-Based Marketing sets sales and marketing up for a “win-win” relationship as all eyes are on the prize.