ANALYSIS

Is the Ship Really Sinking? B2B Budgeting for Post-Slump Growth

The economic downturn is top of mind for every organization. Pick up a newspaper or turn on the TV and it’s hard to dismiss the facts: Recession looms and nobody knows when or how it will end.

As a Research Director in the Customer Management Technology Group at the Aberdeen Group, I’m constantly getting asked what I think about the economy and how it will impact sales and marketing spending over the next year. As such, I thought it would be relevant to share the insights and facts we have collected over the past few months to show how B2B (business to business) marketing departments are coping with the current economic conditions.

At present, the economic recession has not manifested itself as widespread cost cuts in B2B marketing departments. In fact, as B2B companies budget for 2009 marketing expenses, most are planning to spend the same amount on marketing in 2009 as they did in 2008. What is changing is how these organizations are allocating marketing spend in 2009. Current trends suggest that marketers are actually getting more savvy about how they position for growth during an economic downturn.

Research shows that B2B organizations are increasingly shifting resources toward qualifying opportunities more effectively. In fact, in November 2008, Aberdeen surveyed 226 organizations for the “Lead Nurturing: The Secret to Successful Lead Generation” study. Respondents indicated that on average, 28 percent of marketing qualified leads are not followed up on by sales. This is significantly lower than 2005 Aberdeen research that suggested that upwards of 60 percent to 70 percent of leads are never followed up by sales. It’s increasingly apparent that the margin of error for weathering an economic slowdown is getting slimmer. Companies simply cannot afford to let 60 percent to 70 percent of the leads they generate go to waste. The sudden improvements in qualification rates are likely caused by two increasingly prevalent trends in B2B organizations.

Managing the Process

First, the past 5 years have showed a stark increase in the adoption of Lead management solutions like Vtrenz, Eloqua and Manticore. These solutions are designed to help both sales and marketing optimize lead management processes. At the same time, companies are starting to shift away from using CRM as a pipeline management tool and toward using CRM as a sales enablement and effectiveness tool. What? CRM that’s useful to sales reps? That’s right, integration with lead management technology helps empower reps with granular information on individual prospects, prioritization of opportunities, and automated performance measurement.

Second, more efficient processes and automated technologies help shift marketing efforts from an art to a measurable science. Measurement means spending can be justified and return on investments can be identified. In fact, 59 percent of all B2B organizations from the Lead Nurturing study planned to keep marketing spending steady from 2008 to 2009. Surprisingly, only 22 percent of B2B respondents planned to decrease marketing budget from 2008 to 2009, which leave 19 percent of respondents indicating they were increasing marketing budget in 2009. This makes sense as long as marketing efforts can be justified and measured.

Allocation of Marketing Spend in 2008 (Average across 226 B2B organizations)

Marketing SpendAverage Percentage Marketing BudgetCustomer Acquisition50 percentLead Nurturing14 percentCustomer Retention22 percentOther14 percent

Marketing departments are reacting to the economic climate by shifting budget away from customer acquisition to lead nurturing and customer retention initiatives. The research shows a 7 percent planned growth in lead nurturing budget from 2008 to 2009. This is offset by a small reduction in customer acquisition efforts and “other” marketing activities. During economic downturns, organizations tend to revert to marketing channels and mediums that are tried a true (direct mail, e-mail, etc.). These channels deliver repeatable, predictable results and can be justified accordingly, so it’s no surprise to see a significant reduction in “other” marketing efforts.

Planned Allocation of Marketing Spend in 2009 (Average across 226 B2B organizations)

Marketing SpendAverage Percentage Marketing BudgetCustomer Acquisition48 percentLead Nurturing21 percentCustomer Retention25 percentOther6 percent

How does Lead Nurturing Help?

The goal of a lead nurturing program is to support and nurture long-term opportunities with the hope that these prospects may represent future sales. Marketers anticipate budget freezes and longer sales cycles as a byproduct of the economic downturn. As such, many current qualified opportunities may be on hold until the economy shows signs of growth. In essence, lead nurturing is a means of riding out the economic trough and ensuring your companies products or services are top of mind when the economy starts to pick up again.

Lead nurturing is a relationship-building approach utilizing multiple media (e-mail, white papers, telecommunication, seminars, webinars, blogs, collateral, speaking engagements, third-party articles) to support the prospects buying cycle with relevant information and engage in an ongoing dialog until qualified prospects are deemed “sales-ready.” Research shows that top performing organizations are two times more likely than their peers to leverage lead nurturing programs. Nurturing campaigns can be executed across new and existing customers to arouse latent needs and isolate real qualified opportunities.

Recommendations for Weathering the Recession

  • Harness the power of lead nurturing. Only 16 percent of the lowest performing organizations actually leveraged lead nurturing in the recent Lead Nurturing study, while 51 percent of Laggards are planning on leveraging lead nurturing in the future. Top performing organizations overwhelmingly demonstrate the benefits of lead nurturing. In order to get started, consider the following:
    • Identify your prospects buying cycle: Attention, Interest, Desire, Action
    • Ensure both sales and marketing share the definition of a “sales ready lead” — the goal of the lead nurturing program is to drive “sales ready leads” into the pipeline. Do processes exist to pass leads smoothly from marketing to sales and vise versa?
    • Map available marketing material to stages in the buying cycle; develop new material to fill gaps. Lead nurturing is not a promotional drip campaign. The goal of lead nurturing is to become a thought leader and a trusted advisor to your prospects. Focus on delivering educational materials (white papers, webinars, etc.) Research shows that prospects are more likely to purchase from providers that delivered the most insight and information during the assessment period of the buying cycle.
    • Develop a formal process for removing inactive leads from the nurturing program, instead of continuing to do this manually. Ideally, technology could automate this process with far greater efficiency than manual processes.
    • Give marketing and sales access to adding leads to a nurturing campaign, at any stage in the sales funnel
    • Measure performance and adjust marketing messages accordingly
  • Patience is a virtue. Lead nurturing campaigns will not deliver immediate results. In many cases, it could be six to 12 months before the first qualified leads start to trickle out of the campaign. The entire organization must support lead nurturing efforts for at least the length of a typical buying cycle. However, properly executed lead nurturing will deliver a steady stream of qualified leads once the program is established. Marketing should measure and monitor the flow of leads to sales; this is a testament to marketing’s direct impact on the pipeline and contribution to top line revenue.

The “Lead Nurturing: The Secret to Successful Lead Generation” study is available on for free for a limited time on Aberdeen.com


Ian Michiels is a research director and the practice leader of the Customer Management Technology Group at the Aberdeen Group. He can be reached at ian.michiels@aberdeen.com.


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