The Real Way to Increase Conversion Rates

March 8, 2013

Great post from the guys at Tibco (BY )

In 2012, on the two biggest shopping days of the year, Black Friday and Cyber Monday,sales grew by 26% and 20% from the previous year. Don’t believe the apocalyptic news hype, retail is not dying, not even close. Retail is evolving to giving the customer exactly what they want, when they want, and how they want it. If customers don’t want to go to your store, they shouldn’t have to. If they want to shop on their phone or tablet, you need to fully support that.

This is exactly what sellers are struggling to do – make all customer touch points equally accessible, with a completely shared experience, so customers can be engaged at the moment of their purchasing decision.

Time is a Luxury, Methods are Not

Sellers have always tried to maximize customer spending through upselling and cross-selling. Methods which were successful in the past need to be replaced with newer techniques for today’s more aware, less patient customers.

Shopping on the internet is the best example. The probability of customers checking out the offers they receive via email is lower than when they see those offers in real time on the screen when they are shopping online.

Cross-Selling at the Right Time

Online merchants use upsell techniques like providing an option to replace the customer’s selection with a higher priced and better valued item in the basket. At the check-out, the customer will see cross-sell offers with discounts and messages like “people who bought this also bought something else.” According to industry experts, cross-selling to an existing customer only costs 10% of what it would cost to acquire a new one. That cost is further reduced and much likelier to succeed if the cross-sell activity is at the moment of purchasing decision.

What is as Important as When

How you know what to cross-sell to your customer at the point of sale? Providing the same bucket of offers to all your customers will get you a very low response rate. Rent-A-Center, Inc.offers goods under flexible rental-purchase agreements that generally result in ownership of the merchandise by the customer at the conclusion of the rental period. This replaced “after-the-fact” marketing with a real-time dynamic selling vision at the store level by incorporating a 360-degree view of its customers. RAC aggregated real-time data from various touch points of customer interaction and combined the new data with historical information on customer preferences and behavior to create a comprehensive understanding of their customers. This approach enabled Rent-A-Center to provide need based upsell or cross-sell offers to every single customer across the 3,000 plus stores.

We know who our customers are. What we lacked was insight into the products they prefer, the patterns of their rental behaviors, the peculiarities of their demographics, and the changes in their lives that would drive future rentals. The more we know about the customer, the better we’ll be at offering the right products at the right place at the right time, and that should translate into rental agreements with longer life.” 

– Senior director of Data Management for Rent-A-Center

A successful cross-seller ensures that the enterprise’s critical information on customers and products not only remains consistent and current, but can also be applied in real time across locations, lines of business, and interaction touch points.

For more information, here is a webinar on “How Operational Excellence Drives Supply Demand Chain Effectiveness.”


Why Predictive Analytics Will Transform B2B Sales & Marketing Execution

September 12, 2012

Consumer marketers have become adept at driving revenue based on predictive analytics. Potential customers are routinely scored on a wide variety of attributes from lifestyle to promotion receptiveness.  These scores allow consumers to be  segmented into groups based on shared interests, purchase likelihood, and total buying power. By starting with highly differentiated segments, marketers can design programs that are highly relevant and effective.

This is not the way that B2B sales and marketing works in most organizations today.

Yet, B2B is a ripe environment for predictive analytics: selling costs are high, sales probability is low, and resources are very expensive. While the language of B2B marketing and sales is full of references to probability — customer funnels, response rates, conversion rates, close rates, call-to-close ratios — it’s rare to see B2B organizations leverage prospect and customer data to score customer attributes, build discrete segments, and allocate resources to maximize the conversion and revenue.

But all of this is about to change. Over the next five years, common consumer marketing techniques will find a happy home in many B2B marketing and sales organizations.

Here are 6 reasons why:

  • Electronic sales processes are creating massive amounts of useful data: Today, B2B buyers spend more time interacting with companies online than they do with sales people in person or over the phone. For every successful sales call they attend, a typical prospect may spend hours interacting with content, reading forums and blogs, and testing sample products. In today’s world, every buyer action leaves a trail of digital clues that signal their context, needs, purpose, and intent.
  • Prospect attributes can be easily deduced from observable data:Most B2B organizations with CRM and content marketing capabilities have enough data to score prospects on purchase probability, likely problems or interests, and potential solution needs.
  • Relevancy matters: Even as the typical portfolio of products and solutions becomes more varied and complex, B2B sales and marketing messages tend to be narrow and simplistic. The patterns that work most consistently are destined to be forever repeated. For prospects, this means that they are often hit with messages and a pitch that ignore the nuance of their particular needs and segmentation. For many prospects, this is a turn-off that is difficult to reverse.
  • Sales & marketing funnels are based on probability: Typically, 2% of targets respond to a marketing campaign, 60% of leads are accepted by sales, 50% of accepted leads become opportunities, and 25% of opportunities close. When you look at the full marketing and sales funnel, a pathetic 1:667 targets becomes a closed deal. Using predictive analytics to improve any stage of the funnel has the potential to create incredible value.
  • Sales resources are expensive and easily tiered: It’s not uncommon to see a three-tier sales model with tele-prospecting/demand generation representatives, inside sales, and field sales. Typically, these teams are divided with the goal of aligning the highest cost resources to the highest value opportunities. Unfortunately, the allocation of accounts is typically very crude with simplistic measures like revenue or employee count determining which accounts go to a particular team. By using predictive analytics to allocate resources based on real-world potential, sales teams could increase revenues while reducing the cost of sales.
  • Marketing programs vary greatly in expense and effectiveness:If you have a stalled prospect that you want to move, a marketer has many choices. They could send an email, send a direct mail, invite them to an educational seminar, or bring them to a hospitality event. The continuum of marketing costs ranges from pennies to hundreds of dollars with corresponding variations in conversion rates. To maximize impact, marketers should save the big dollar investments for the highest probability and highest value segments. To do this, however, marketers need to use predictive analytics to score prospects based on their probability of purchase, their potential buying power, and the likely impact of a particular program or technique.

While smart organizations are beginning to put the foundation in place to better leverage data in the marketing and sales process, real obstacles still exist to efficient use of predictive science in most B2B organizations. First of all, one legacy of sales-sourced CRM data is a mess of information that is inconsistent and difficult to leverage. Second, the new art of data-driven marketing and sales requires a new set of skills that are hard to find in most B2B organizations.

But most critically, it’s hard to change both structure and behavior. The better use of data in the sales and marketing process requires changes to the way that people sell, the way that leads and accounts are allocated to sales people and territories, and the way that performance is measured. These type of changes can take a long time.

But with the current B2B shotgun marketing and sales techniques working just 1 out 667 times, the upside of change is immense.

Thanks to Paul J. D’Arcy is a CMO, entrepreneur, and writer based in Austin, Texas


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