The Case for Outsourced Channel Marketing
Written by Jonathan Calver, CEO, StrategyMix
Most channel marketing programs are based on a traditional mass marketing paradigm. With traditional marketing, you send relatively generic content to a database to see who shows interest. You then pass the “leads” (ie: those who respond) to a partner’s sales team, so they can qualify them into sales opportunities. The problem with this approach is that it is not working as well as it did in the past. Response rates and lead conversion rates are both declining. In Part 1 of this blog, we explain why the traditional marketing approach is now failing (when it used to work) and in Part 2, we provide some guidance to help you transition to a more effective, micro, ‘word-of-mouth’ marketing approach. This blog has been written for everyone in the channel – vendors, partners and distributors. The underlying theme of this blog is that there needs to be a Channel Marketing Transformation, because the current approach to Channel Marketing is broken.
Part 1: The Problem with Mass Marketing in the Channel
Problem # 1: Declining Response Rates
The first question to ask ourselves is “Are response rates declining?” To answer this question, we at StrategyMix, included a question on a registration form for a series of webinars that we’ve been running on Account-Based Marketing. The question was: “Do you agree with this Statement: “Marketing response rates are declining because prospects are being bombarded with too many emails and phone calls, many of which are not relevant?” 95.6% of the 119 respondents agreed with this statement with just under half (47.8%) saying they strongly agreed. All these respondents were from the channel – partners, vendors or distributors. Only 1.7% disagreed. The rest said they didn’t know. So, yes, I think we can conclude that response rates are declining in general, but I also think that people are selective. That people still respond to the people they know and trust, but ignore messages from people they don’t. The fact that people are selective has implications for channel marketing and is a beacon of hope. See Part 2 of this blog.
Problem #2: Low Lead Conversion Rates
A second fundamental problem in the channel is low lead conversion rates. Let’s take a white paper campaign as an example. A traditional channel marketing approach is that a vendor writes a white paper and then gives it to a partner to promote to their database. This generates “leads”, which are then passed to the partners sales team to follow-up and qualify. But does this work? No, it doesn’t. What mostly happens is that when the partners follow up these so-called leads, the prospect will often say they haven’t read the paper yet and they are usually reluctant to enter into a conversation on the white paper topic. For the majority of the time, the prospects don’t even accept the call and certainly don’t call the BDM back, if a message is left. The reality is that the prospects see no connection between a white paper written by a vendor and the BDM of a partner, so they ignore the call, which results in low lead conversion rates. Eventually the BDMs stop making any attempt to follow-up these leads. And many channel marketers ignore the reality that nobody is going to follow-up their leads, so they persist with a strategy that has no chance of working.
Problem #3: Low Channel Marketing ROI
If we accept that we have low response rates and low conversion rates in the channel, then this brings us to the thorny topic of Channel Marketing ROI. We need to be honest with ourselves and ask the question: when was the last time, you saw a convincing ROI calculation? I challenge you to write to me (click contact us) with a convincing example. The reality is that most sales do not come from a single marketing campaign, such as a white paper campaign. They come from an existing relationship. What channel marketing can do, is to help form these high value relationships. This point is critical.
Was mass marketing ever the right strategy for the channel?
Mass marketing is a numbers game. Mass marketing works for large IT vendors because they have large, global databases. It has never worked as well for IT partners with smaller databases. In the case of emails, if a 2% response rate is the best you can hope for, then to generate 100 leads you need a database of 5000 emailable records. Many partners simply do not have that many emailable records. They sometimes have as little as 500, which means that the best they can hope to do is to generate 10 leads. It’s not enough. The figures for cold calling campaigns are about the same. So, this begs the question. Was mass marketing ever a good marketing strategy for channel partners?
Will the situation get worse? – the impact of GDPR and other legislation
And now we have GDPR, which at least in Europe is going to make it very difficult for partners to buy emailable databases to reach the database “mass”, required for a mass marketing approach to generate a reasonable quantity of leads. Could this be the final nail in the coffin for mass marketing in the channel? To Read Part 2 click on: Blog – How to Transform, your Marketing to a Micro, ‘Word of Mouth’ Marketing Approach