Pauline E. Ranger As I walked through Downtown Pittsburgh recently, I was able to see husbands and wives, brothers and sisters, and grandparents and grandmothers, all advertising their favorite retailers as they carried bags to their cars, from Saks Fifth Avenue to Barnes and Noble to Victoria’s Secret.
I smiled at myself, “Advertising surrounds us.” We Americans have to maintain our role as the dutiful consumers of goods in the global marketplace, even if it means taking out a home equity mortgage and using our homes as ATMs!
If the consumer doesn’t buy it, the seller can’t sell it. This little truth is where the differences between business-to-consumer marketing and business-to-business marketing start. B2C and B2B are two completely different things. Since most companies in the United States have less than 100 employees each, business owners and business schools must educate themselves and their students about these differences. If you have an MBA, you probably know more about marketing products for IBM than a $2 million custom manufacturing company. Most of the millionaires in our country are created by small businesses.
Unfortunately, small business owners who make less than $50 million a year aren’t very good at marketing their companies. As a result, they either have to wait until they sell the business or if they can’t negotiate a successful sale, they never reach millionaire status. In the end, their business only provided them with enough income to cover all of the risks they took.
These entrepreneurs are taking unnecessary risks and investing money in their businesses in order to grow. Still, the programs they support were never designed to work and could not have grown their businesses. It happens, but it is preventable with some education.
Marketing is the only corporate function where I believe program investments are not as profitable. It’s unfortunate because marketing is supposed to be the one that gives businesses leverage. This should help to sell more products and services more easily. Business owners spend money on marketing programs and then watch it disappear. This problem is not unique to you. CEOs of larger companies are also frustrated by the inability to track marketing performance and its impact on sales.
It is much easier for large businesses to make a mistake of $1 million than it is for small ones to make one of $10-$250,000. In the first scenario, the decision-makers can go on vacation because they’re playing with other people’s money. But in the second, the business owners have to take responsibility for their decisions. Money either ends up in their pocket or the pocket of another.
While it’s a systemic issue that has grown out of the failure of the industry leaders to approach the marketing function by silo and not by process, I cannot let private business owners off the hook because they prefer to be fooled into just doing branding instead of doing the real work to solve the problem of getting the marketing to activate the sales.
It is a fact that many business owners do not take the time to learn what marketing is and what it can and should do for them. Even those who have not begun with an accurate and good definition of marketing. They end up going off course very quickly, spending money on a survey to listen to customers, to change the name, or to redesign a logo, which has no real purpose. Why does this occur?
Many private B2B CEOs confuse marketing and advertising, which are only very narrow aspects of marketing. They say things like, “We are investing in marketing!” Check out our new brochure. Listen to our radio spot. Check out our press release or visit our new website.”
If your sales team receives a lot of inquiries from pre-qualified people to purchase your products and services, then I’m sure you have me. If you are like the majority of CEOs that I work with and talk to, you will get almost no activity – even though you think your efforts are good and necessary. You are absolutely right. These are not the most important things. They will not be enough to win the game. Your sales process needs to be activated more effectively.
Traditional branding channels, which work for large retailers (such as radio ads and magazine ads), are not the best ways to spend marketing dollars for businesses that sell to other companies. You will lose money. You will lose your money. You will be angry. You will become sore.
You turn to your advertising agency instead and ask them to “Lie to me!” Tell me that it will work. “I will believe you, so I won’t need to think about it.” So they do. You are happy…for a little while.
You then see your financial statements and your dwindling sales pipeline. What happened? The plan will be missed by 60%
You are losing money. You are losing money. You may still be doing advertising, but making money is not required.
In a very important way, your marketing plan is also your business strategy. Advertising is one way to reach your strategic goal, the customer. As the terrain changes, so must tactics. Advertising and branding aren’t effective in B2B.
Here’s a simple exercise. Look at the billboards next time you’re driving around your town and count how many of them are for businesses. Ask yourself how many of the billboards that are advertising businesses are actually for ad agencies. Why don’t all ad agencies in town use branding ads to win your business?
Their sales depend, like yours do, on relationships. These relationships must begin in some way, usually via networking, cold calling, or word-of-mouth. Your agency will spend its energy and money on this. You’ll realize that the only sales that you can positively influence by engaging with them are those of the agencies, not yours.
In theory, the way a large retailer markets to its customers is similar to how an architecture firm markets to its clients. Both companies try to understand what their customers want and then figure out how to meet that need best. The way these decisions are implemented is completely different. If you are a business owner of fewer than 100 employees and want to get more out of marketing, then this is what you need to know.
