"We are unusual in that we don't acquire customers through the sales force. We do have a sales department, but they are for existing account penetration," explains John Toraason, Director of Marketing for B&B Electronics, a manufacturer of data communications equipment for industrial and commercial use.
In fact, for B&B a 'sales-ready lead' is defined as an account that's already bought two-three times with an average order each time between $300-$500.
To raise the bar even higher, predicting when a prospect would be ready to buy was nearly impossible. Generally purchasing was driven neither by seasonality, nor by impulse buys based on special offers. So, B&B had to keep its brand constantly in front of prospects throughout the year. Toraason calls this "drip irrigation."
Continual marketing to your entire prospect universe is expensive. "I spend a lot of money in marketing," notes Toraason. Naturally, to get his budget approved, he had to keep the CFO happy. And, B&B's CFO wanted to see a measurable profit on every marketing activity.
How can you acquire new multibuyers via marketing alone, market constantly all year long, and not go into the red at any stage of the demand generation, nurturing and conversion cycle? CAMPAIGN
Toraason and his team made three critical decisions to grow the customer base aggressively:
o Multiple media -- When a prospect was ready to convert, no matter what media they favored (online or offline), the B&B brand and response devices would be in front of them. To be able to get out hundreds of campaigns a month with a relatively small team, they had to invest in setting up solid workflow and automation systems. (See link below for a typical B&B marketing program flow chart.)
o Measurement -- Every campaign would be measured by special landing pages, in-bound operator queries, direct mail codes, etc. No campaign would launch if it couldn't be tied to revenues in the end. This meant prepping the CRM system to be able to track and score prospects every step of the way was critical.
o Test aggressively -- In order of importance, lists/media buys, frequency and timing, and production expense (e.g., cheap postcard vs fat catalog). This meant the marketing team had to have time and resources to produce analytics reports to act on their findings.
Next, Toraason rolled up his sleeves for a thorough past purchase analysis project. What could he learn about the patterns of buying behavior that might help marketing trigger buying in future?
Turned out customers went through a series of stages in their buying relationship with B&B. In each stage, they reacted differently to marketing and sales activities, and were correspondingly worth a different level of marketing investment. (See link to loads of creative samples below.)
Stage #1. Prospect
Someone who raised their hand and said, "I'm interested in your products, send me information." Although they were in the target universe, they might not be ready to buy from B&B right now … or ever. New prospects had to be nurtured as inexpensively as possible because their conversion rates were the lowest of any group.
To generate a continual flow of new prospects throughout the year, the team tested nearly everything you can imagine, including:
- "Fat" catalogs to rented direct mail lists quarterly.
- Search engine ads, including Google, Yahoo, MSN, Ask.com and Business.com.
- Inventory listings and other offers posted on vertical search sites, including GlobalSpec, Kellysearch and Thomasnet.
- Card deck advertising (single cards and folded 'mini-catalogs') in about 10 related decks, including IEN, Machine Design, NASA Tech Briefs.
- Banner ads on Web sites and email newsletters of related trade publications such as Automation World.
- Trade show booths at national, regional and extremely niche shows.
Aside from the fat catalog mailings themselves, most offers were for catalogs or for white papers (and then the name would be mailed a catalog as a follow-up test).
Toraason's team also redesigned the B&B Web site to turn it into a catalog-request generation machine. The home page prominently featured a giant fat "Free Catalog" button in the sweet spot above the fold. (We think more manufacturers should try this.)
Plus, they tested a two-part triggered email campaign that let catalog requesters know their catalog was on the way and then reminded them to order from it.
Stage #2. Trier
This was a prospect who made his or her first purchase. Although they were "trying B&B out," they might never buy again.
Also they might not realize B&B offered anything beyond the item they purchased. And, they might forget B&B's brand name within weeks. This person had to be nurtured in a timely fashion triggered by their date of purchase so B&B wouldn't lose the flow.
Toraason's team tested a variety of triggered campaigns sent to these names. The campaigns included the following:
- Nine-part educational email series that looked like "text-only" (not a sales piece). Each piece focused on one particular B&B product line and featured useful facts any engineer would like to know about that area. This content was valuable enough to function as an article without sales material. But, naturally the letters also included hotlinks should the recipient want to click for product info.
Toraason's team tested frequency to see which email would work the best, weekly or monthly. They also watched open rates to see which subjects got the best response, so that they could move those letters higher up in the series.
- Outbound telemarketing call was timed about a week after the first purchase shipped. "We say, 'How's everything going? Did the order show up as expected? Did it meet your needs?' Are you the specifier? If you're not, could you give us the specifier's name? Is there a large project coming up that you’d like someone to call you about in the future?"
- One-time inclusion in future full-sized catalog mailings.
- Cheaper direct mail campaigns such as double postcards (postcards that fold out to a larger size) and small mini-catalogs focusing on just one product line at a time.
Stage #3. Buyer
This is a trier who has had made his or her second purchase. B&B might not be the supplier they would automatically turn to for all relevant purchases yet … but a pattern was emerging.
This person was worth investing in more significantly -- more nurturing dollars were spent over an extended period of time. Toraason's team was more likely to continue mailing the most expensive full-catalogs to this account quarterly for quite a while.
Stage #4. Customer
A buyer who had made three or more purchases showing they considered B&B to be an important supplier. Marketing would continue to keep in touch with this customer on a regular basis.
Now the sales team would review the account and strongly consider getting involved to deepen and broaden the relationship. One key was how many different product lines the purchases had come from.
Again, this customer would also receive the most expensive catalog from then on, along with any other campaigns such as mini-catalogs that Toraason's RFM (recency, frequency, monetary value) analysis proved were worth sending them.
Stage #5. Dead/unworthy account
"Dramatic increase in leads can be costly," warns Toraason. "If you fire a third of your leads who are the least responsive, then your value per remaining lead goes up. If you're 10% profitable, and you can save $100,000 by cutting unresponsive leads, that's almost like raising sales by $1 million.”
Although most marketers hate to consider slashing their prospect file (you instinctively want to give you everyone another chance), most CFOs love it. And Toraason's team were all about keeping B&B's CFO happy.
So, they set up a routine nixie removal process (retiring or re-researching names whose mailings had been returned as non-deliverable in email or postal mail.)
They also "fired" leads from expensive campaigns if those leads would not hand over key account information, were in a less responsive geographic location (such as a second or third world marketplace), or hadn't responded to any contact in a certain time period.
Toraason felt relatively safe doing this because of the extent of his outbound prospecting programs and the popularity of the B&B Web site. Any leads mistakenly fired were more than likely to return to the fold in their own time.
In the past, B&B's customer file grew by 15%-20% per year. Since the team revved up the marketing engines as described above starting in 2004, that growth more than doubled to currently 51% per year.
Roughly 15% of all incoming prospects convert through all the stages to becoming true customers. The average customer buys $1300 of equipment from B&B per year. And, Toraason notes he has a great relationship with the CFO.
Some lessons learned:
- Card decks, although seen as old fashioned by many marketers, work gangbusters for B&B. Toraason laments that decks are folding because marketers don’t buy inserts in them. He uses them in the US and abroad.
- "Google kicks butt. By far 75% of our PPC-driven names come from Google. Ask is also decent, but not dramatic. MSN is still weak and Business.com can be hard to use." However, that doesn't mean the team plans to discontinue any search engines. The numbers prove it's worth casting the widest possible net.
- Super-niche works best for trade shows. Toraason has all but stopped booths at national shows, "The people you want are not coming to the big shows. A lot of it has to do with the Internet. People used to go to the show to get information they can now get online." His favorite shows now are "vertical, niche" with perhaps 10 speakers all focusing on a single new tech topic.
- Trade magazine lists have never pulled as well as prospect and buyer files from other, related manufacturers (that's always been true for every industry). The best trades are again super-niche and highly technically educational journals, such as NASA Tech Briefs. Lists from controlled circulation trades with loads of ads and product shots (i.e., 'advertorial') are not pulling well.
- Triggered email timing tests ended up a wash. Turns out folks opened and clicked about the same whether they were getting emails weekly or monthly. Toraason decided to change the spacing to roughly 20 days between sends. That way names would hopefully remember the B&B brand, but he could stagger the messaging over a longer time period; therefore, a mailing might be more likely to hit a time when the prospect is ready to buy.
- Mini-catalogs and postcards are working well enough to be continued to the lower responding names (in place of a catalog) and to the highest responding names (to supplement the catalog.) Toraason notes he thinks his team's unusually beautiful product photos along with copy brevity keep response high.
- The telemarketing campaign to first-time buyers is a huge success. "We have a 74.9% rate of getting through, obviously using multiple calls. This would take about 81 hours of calling per 1,000 names. We're spending under $4 per completed call."
20% of connects positively answer the hot-button questions about their future needs and interests. 10% of connects give a name of another specifier in their organization to send a B&B catalog to. So, the telemarketing grows the prospect file, fleshes out the CRM lead ranking system, and improves future conversions.Useful links related to this article:
(Loads of) creative samples from B&B's campaigns:
LKCS - Direct postal mail printer and lettershop B&B uses:
WebSideStory HitBox - the Web analytics software B&B relies on:
CoolerEmail Inc - email software B&B uses to send campaigns:
NOVO1 (formerly Sturner & Klein) - telemarketing firm B&B outsources trier folllow-up calls to:
Microsoft Axapta - CRM system B&B currently uses to aid in lead management