B2B Marketers Fate Rests in the Hands of a Few

B2B Marketers Fate Rests in the Hands of a FewAt the recent ITSMA Marketing Leadership forum I was stunned by a presentation given by Sean Geehan CEO of the Geehan Group author of the upcoming book the B2B Executive Playbook. The big eye opener for me was – B2B marketers are always tasked with getting net new customers when in reality their existing customer base is their most important source of revenue and referrals. Therefore our spending patterns are typically reversed. Hear me out …

If B2B marketers are constantly focused on gathering new customers our spending will be misaligned with the actual group that can delver us the highest return – our existing customers. And while that doesn’t sound that exciting – it can get really exciting when you align your budget to a group of customer that can help you deliver sustainable growth! (Which is what the CEO and the market wants from you anyway!)

New customers will cost a lot to acquire and in their first year or two deliver small revenue as the relationship between your company and the new customer is growing. It’s a tender sapling that needs to be nourished.

But in many cases, 20% of a B2B company’s’ customers are responsible for 80% of the revenue. If you apply the Pareto principle that means that out of 400 customers – 80 customers are the ones that deliver a bulk of your revenue. (In most cases that means 80 decision makers!) The question that really opened my eyes was – how much are you spending on those customers? What percent of your budget? 20%, 50%, 80%?

Unfortunately in most cases the proportion of spend on those customers is painfully small and the argument here is that needs to change. Especially in an economic climate like this! The Bottom Line – The Fate of B2B Companies Rests in the hands of Just a Few People! Its time to start embracing those few people in ways B2B marketers haven’t before.

5 comments to B2B Marketers Fate Rests in the Hands of a Few

  • Wow! nice blog. i loved reading it. It has lots of information. Thanks a lot!

  • The generalisation that B2B Marketers are “always tasked with getting net new customers” is a pretty large one. I think that B2B Marketers are indeed looking for new customers but that this in many cases are existing clients to cross- or up- sell or get referrals from. Many of my colleagues are in fact well aware of the need to spend their valuable time on their existing client base to grow revenue instead of only going after the “new new” clients. Especially in B2B, where relationships count more than anywhere, this strategy will prove to be the winner in the long run. Clients who know, trust and love your company act as “super promoters” of your business. By nurturing these Brand ambassadors you are able to build the ultimate referral model that always outperforms mostly chasing after new clients.

  • […] B2B Marketers Fate Rests in the Hands of a Few At the recent ITSMA Marketing Leadership forum I was stunned… […]

  • B2B marketers will and should spend more on new customers. It takes a lot more work to win them. However, you can’t neglect your customer base. You’ve already won their trust, so you can stretch your marketing dollar further. I agree the proportion of spend on customers can’t be painfully small, but it can be smaller.

    Regardless of how you cut up your budget companies need to get more an more targeted. Personalized marketing needs to play a larger role.

    Incremental or organic revenue growth from an existing customer base is the turtle, new biz is the hare. Customers always generate more revenue than prospects and slow and steady wins the race.

  • Michael: Thanks for your comment. How I think about marketing to current customers is selling new offerings to them…selling into other areas of their business (business units, goes, etc). After analysis, one client identified they had $6 billion in opportunities within their current customers and $4 billion in the rest of the market. The company has been profitably growing by 40%/year the last 5 years and will hit $3 billion in sales by year end…. If new client acquisition is 3-5x greater cost then retaining and growing, which marketing budget allocation approach (new customer acquisition or retention/account growth) will maximize the top and bottom line. They have a fixed marketing budget (2.5% of sales). This is very typical…especially in companies that have extensive R&D, are innovators or are acquiring companies.

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