To hear LookBookHQ co-founder and CEO Mark Opauszky discuss it, the digital revolution has left more than 90 per cent of B2B marketers on the wrong side of history.
Instead of disrupting the industry for the better, he says, the various companies which have entered the marketing technology space over the past half-decade have lowered both average contract values and client retention rates, suggesting that many businesses are giving marketing technology a try before walking away.
“Just a handful of years ago, there were maybe a couple hundred vendors in this space, and as budgets grew considerably in the last six or seven years it became thousands,” Opauszky says. “But rather problematically we haven’t seen a lot of growth, so the vast majority of [marketing technology] companies – 95 or 96 per cent of them – are now selling very little in terms of net new products and net new recurring revenue every year.”
As the leader behind one such company, which he calls a “content activation platform,” Opauszky himself has consequently engaged in some soul searching, and is more than happy to share the results: a company that he believes stands outside the aforementioned 95 per cent thanks to three counterintuitive marketing insights.
Insight 1: Raising prices increased adoption
Raise prices, lose customers, the conventional thinking goes.
Yet Opauszky says that when LookBookHQ raised prices many parts of its business became more efficient.
“One of the things we saw almost right away was that it didn’t affect our yield speed, even though we were significantly increasing the price of our offering,” he says. “We had much better unit economics to support success programs for our clients, and we generally saw higher adoption rates – I think product adoption has always been an issue in our industry – and overall better retention.”
Opauszky’s suspicion is that the higher prices encouraged LookBookHQ’s potential customers to examine its product with a more critical eye, fostering more intelligent questions that sales staff were all too happy to answer.
“It’s not easy,” he acknowledges. “Customers demand more from you if you suggest your product should cost more.”
Meet their demands, however, and you wind up creating a virtuous cycle in which the money customers invest in your product ultimately comes back to them in the form of successful campaigns, which in turn drives additional investment and helps both companies prosper.
“It sounds glib, but consider pricing as a vehicle to open up value for both you and your customer, and not as something that you need to lower to drive competitive advantage or generate growth,” Opauszky says. “At least in this present industry, our observation is that simply isn’t true.”
Insight 2: Serving fewer customers led to faster growth
You would expect – and many companies believe – that the more customers you can serve, the more your revenue goes up. Just look at Amazon.
But in LookBookHQ’s case, at least, Opauszky says that placing greater focus on a smaller number of high-value customers turned out to be the better call.
“In our case, we took a look at the different folks who could be in our market and said, ‘Look, we could likely service around 25,000 to 50,000 companies out there fairly easily.’ But when we became really, really, really honest about it, we found that we just wanted to focus on a couple of thousand,” he says. “It’s wonderful to say that your product’s great for small businesses all the way to enterprises, and that it’s both easy to use and scalable, but that’s rarely the case.”
Instead, he says, LookBookHQ bet on the opposite approach: the company and its salespeople became experts in targeting a narrow segment of its potential market, and only after becoming experts in one 2000-member segment of their potential client base did they begin seeking out another segment.
Ultimately, Opauszky says, that refined policy led to faster close rates and cheaper customer acquisition. By concentrating on – and becoming an expert in supporting – a subset of their ideal market, LookBookHQ enjoyed increased growth.
“It helps us to say, ‘Look, we have an ideal customer profile and it’s very specific,'” Opauszky says. “We choose our customers as much as they choose us.”
Insight 3: Half of selling happens before anyone picks up the phone
“I think increasingly people know this, though perhaps outside the marketing space it’s a little less talked about,” Opauszky says. “People inherently self-educate now. Obviously there’s value in salespeople, but rarely in the early part of the process are potential customers going to accept outbound calls or want to sit down and talk with even a very good salesperson. They’re going to want to do a lot of the reading and research themselves.”
“So the more you can educate your audience through your marketing channels, the more willing they will be to talk to you.”
Too many B2B marketing firms focus on metrics such as page view time and viewer numbers, Opauszky says, rather than focusing on other metrics such as the value of content created for potential customers who might be passively researching the very services that happen to be offered by your business.
“It’s not entirely counterintuitive, but there are still many business that would say the right way to grow is to hire more salespeople and get more people on the phone and more people on the street talking to folks,” he says. “But particularly in the B2B industry, the quality of the material you can put out for people to consume helps with the educational process and leaves them much more open to speaking with salespeople.”
Acknowledging that the majority of customers are going to educate themselves, and ensuring that educational step is handled by the department best equipped to make it engaging, will make the time potential customers actually spend chatting with your marketing team that much more efficient, valuable, and – more importantly – pleasant, Opauszky says.