An Interview with Sean Geehan, CEO and Founder Geehan Group

Interview with Sean GeehadI met Sean at a recent ITSMA Marketing Leadership forum. Many of his ideas really hit home for me so I wanted to share these with you. He has a forthcoming book that I am also really looking forward to reading called the B2B Executive Playbook where he will be talking about how to create sustainable and predictable growth.

Q.  So tell me about the typical concentration of B2B customers versus B2C customers?

A:  In the B2B world, the actual number of customers is microscopic when compared to B2C.  B2B executives are truly addressing a much smaller pool of customers. A B2C company like Starbucks, whose revenues are approximately $10 billion, has a huge number of customers, 70,000,000.  Compare that to a $7 Billion B2B company like Celestica for example, which has only 100 customers.

Even more daunting is that most B2B companies’ top 10-20% or their customers account for 90% of their revenue. For Celestica, just 10 customers account for 90% of their revenue (over $6 billion).  Conversely at Starbucks, $6 Billion of their sales comes from approximately 11,000,000 customers.

No matter how many venti, nonfat, cinnamon-sprinkled, decaf lattes Starbucks’ top one thousand customers bought, it wouldn’t dent Starbucks’ performance if all those customers decided to switch to McLattes from McDonald’s. If only two of the top 10 left Celestica, they’re revenue could be down 15-20% (about $1 billion).

The harsh reality with most B2Bs, regardless of the company’s size is the fate of a B2B company lies in the hands of just a few customers.  How marketers address this is the difference, which leads to either dominant, mediocre or disastrous results.

Q.  Where can B2B Marketers begin to improve their results?

A:  Here are two quick ways to boost marketing efforts:

1.    Target current customers.  Any organization’s best, least expensive and quickest profitability payback opportunity is within their current customer base.  This is what the greatest companies do, including large, mid and small alike. Oracle, Wells Fargo (commercial group), HCL, and Intesource to name a few.  They also recognize the more customers buy from you, the less likely they are to leave you…so yes, hugging and TLC is highly recommended.

2.    Target Decision makers at prospective target accounts.  Having them champion and drive the buying process increases close rates, accelerates the speed of contract signing and increases the margins and deal size.

Q.  Do you typically see B2B marketing spend allocations that are not aligned with business goals?

A:  Too often we get hung up on the latest “hot thing” in marketing: the jingle, the tag line, telemarketing, direct mail, CRM, brand management, websites, SEO, Social media, etc. And while they are important (given the right situation), effective, etc., they are tools, systems and programs…the means to an end, not the end.  Right now the “hot thing” is social media, and as powerful as social media is, it still needs to be balanced and integrated into the overall marketing plan.

Start with making sure the ROI of each program supports the business goals.  Then balance the marketing mix to align to these goals and maximize the impact your marketing dollars have on the business goals.  This ensures marketing budgets and activities are aligned with your business goals.  The more they are aligned the greater predictability in the results and keeping and growing your budgets.

Q.  Why do B2B marketers spend more on acquisition than retention?

A:  It’s simple. Everyone gets excited when a new customer is signed. There’s a celebration. The bell is rung. Lots of recognition and rewards are handed out.

How much celebration is there when a long-standing customer renews for the 6th straight year?  Forget that they haven’t bid out the work in 3 years (no competition=greater margin) and they are already in your system (low cost of support, faster payment = greater cash flow). There’s clearly an imbalance here.

Now the reality: It costs 3-5x more to acquire vs. retain a customer. If your current customer buys more stuff from you, it’s harder for them to leave you (increased switching costs). If current customers are much less likely to bid out your work (increasing profitability), shouldn’t you evaluate how/where you’re spending your marketing dollars?

Marketers need to challenge how they think. If new revenue is easier, less costly and more profitable with current customers, shouldn’t we start there?…The great ones do.

Q.  What’s one place where you would recommend B2B Marketers focus for the rest of this year?

A:  Engaging decision makers from your top accounts – in a group setting, have them share problems they had and how they solved them (many of which your company most likely helped to solve).  This can be as simple as a private event on the front end of an industry event.

It accomplishes many objectives that drive deal flow:
•    It enhances relationships, trust and loyalty for your company.
•    It gives you an opportunity to better understand their needs (current and long-term).
•    It helps marketing build more effective value propositions, messages and lead generation programs.
•    Finally, it enables them to better understand who you are and the scope of your capability (short term revenue).

For example, customer A may be buying a certain set of services from you, but when customer B shares how you helped address something else, another opportunity has just been uncovered. And yes, you’ve just generated a qualified lead for your sales organization. This is always the low hanging fruit.

Just three weeks ago a $220 Million division of a company brought 10 top European customers together to meet with their peers.  Through the discussions over $18 million dollars of additional opportunities were uncovered that the host supplier was unaware existed.  Verbal commitments have been given for over $12 million. The host expects this single event to increase total 2010 sales by 5-12%.

Please note while I am not a customer of his firm the Geehan Group I am in discussions with them about having them consult for us here at Avaya.

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