Smarketing: A case for sales and marketing alignment

When a Head of Sales says “the leads generated by marketing are no good” you know you need Sales and marketing alignment. This essentially means adopting a single view of sales and marketing which works together seamlessly to generate revenue, leads and close sales. This makes it much easier to track results and make high-impact, agile changes in a bid to increase customer numbers.

Aligning sales and marketing strategies: Smarketing

Most organisations still believe that the perfect sales and marketing narrative goes as follows: marketing generates leads for sales and then the sales team qualifies these leads, creating opportunities that the salespeople hopefully turn into revenue. This, of course, perpetuates the outdated mindset of “Sales Vs. Marketing”, but we need to eliminate this attitude and create a partnership between the two teams.

Agree on customer personas

Both sales and marketing teams need to know exactly who they are selling to, and not having defined customer personas can lead to a disconnect between your teams.

Sales, for example, could think they’re selling to global enterprises, while all your marketing materials are targeted at small to medium-sized businesses. What are your salespeople going to do when all their leads are asking for the lowest tier software package, while their scripts are geared towards enterprise-grade solutions? First off, the messaging will be all wrong, potentially resulting in lost sales; secondly, their forecasted sales figures will be skewed in the wrong direction, making the team look like it’s underperforming.

Everyone needs to be on the same page working together as a team, meaning sales and marketing need to agree on the customer profiles – ideally creating them together so there’s no disconnect. This will help both teams understand the type of customer they will be targeting and dealing with, based on factors such as company size and industry. This will help you understand their problems and their needs, which will help massively with creating effective messaging that really speaks the customer’s language.

Outline the customer journey

Second, focus on creating and defining a single customer journey. The aim should be to construct a consistent brand experience for the customer that stretches across your marketing outputs and sales pipeline.

Begin with the awareness stage of the customer journey and work right down through to the purchase stage. The whole experience should tie together, and this connectivity should allow sales and marketing to track their prospects across the entire funnel.

Track the same KPI’s

Sales and marketing success is measured differently, which becomes a bit of a challenge when trying to align the two teams.

Sales is measured by numbers (including new accounts, number of deals closed, number of contracts renewed), while marketing is measured by brand awareness, as well as quality and quantity of leads generated. So it should come as no surprise that the teams are, more often than not, misaligned.

Measuring joint key performance indicators (KPIs) is a great way to get your teams in sync: doing so ensures your team is working towards a common goal. It will help you identify the weaknesses in your sales funnel – and not just parts of it, the whole thing.

Sales and Marketing Aslignment

Create consistent messaging

We glossed over this before, and you’re bound to have experienced this at some point, whether among your own team, or when being sold/marketed to by another company. Often, the sales team will call something one thing, and the marketing team will call it something else: classic example, your website calls it an “application” while your sales team calls it a “platform”. This is confusing for potential customers, especially in the world of SAAS – remember, not everyone is an IT expert and many customers may be ideal prospects, despite not being “tech-savvy”. You could end up with lost sales due to confusing, mismatched messages.

One of the biggest benefits of aligning your sales and marketing teams is producing consistent messaging that both teams use: your marketing messages can now inform and educate the prospects while the sales team reinforces those same messages and closes the deals. If the marketing messages work, the prospect is brought through to the sales team who can then reiterate the messages and specifically act on them to close more deals.

If you avoid doing this you can end up with an inconsistent – and ineffective – journey for your potential customer, so it’s important to maintain a consistent message across the entire customer journey.

Communication

A key benefit of the two teams collaborating is open communication, which should be constant and open. Encourage the sales department to give feedback on the quality of leads every month. This will help the marketing team better understand which types of leads the sales team are closing, helping them focus their strategy to generate better quality leads.

Look at post-sale growth and retention

There’s a lot more to gain from Smarketing than just gaining customers: the teams work together to improve customer growth and retention.

It costs more to attract customers than to retain them. By only focusing your efforts on signing up new customers, you could be missing on making profits from your existing customers. Sales and marketing should be working closely together in order to optimise the lifetime value of your customers – after all, you’ve made the effort to catch them, why not make the effort to keep them?

And this is where technology comes into play.

Technology for Smarketing

Companies that are really good at aligning their sales and marketing use technology to support their teams, with the most effective being the CRM.

A good CRM software will provide you with a detailed view of the customer, allowing your team to be more agile and responsive in delivering value at every stage of the customer journey. The introduction of sales automation tools and marketing software allows you to gather a wide range of data on prospects, making the whole process much more data-driven.

The most complete CRM, Marketing automation and Sales automation all in one software on the market is Hubspot.

Having the right technology to hand will help you bridge that gap between harvesting marketing data on prospects and turning them into leads and then sales. We’re going to look at two key tools here and how you can align them to your Smarketing team: Hubspot and Salesforce.

Hubspot Sales and Marketing Alignment

Hubspot alone is a great tool for aligning your sales and marketing teams and strategies.

You can create and optimize processes within Hubspot that ensure no lead is left behind, and all inbound leads are prioritised based on your sales process.

If you clearly define each part of these processes – such as tracking the right metrics and scoping out the weak areas – then you can focus on the areas that need continuous improvement.

Hubspot is a great tool for sales and marketing to use to work together on creating and defining buyer personas. The sales team can describe to the marketing team a typical meeting with their prospects and use data from Hubspot to give accurate descriptions of sales-ready leads. Marketing can then understand the questions sales were asked in the field, the objections they need to overcome, and the problems customers want to solve.

Hubspot Sales and Marketing Alignment example

You can then use this data and share it with the marketing team in Hubspot to build your buyer personas. This data from Hubspot can ensure you painted an accurate picture of our clients. Your sales team started to become more engaged with the marketing department’s work to help the team better understand leads to deliver marketing content that addresses the real needs of prospective customers, allowing both teams to create a more aligned marketing and sales strategy.

You can also add these personas to the HubSpot Persona tool. This will help you keep tabs on the buyer journey and marketing materials by persona. HubSpot workflows can be used to map existing and future content based around the buyer personas you’ve created. Workflows can also support progression through each stage of the buyer journey, ensuring they match each of your different personas.

To do this, you will want to assess all of your current content (landing pages, emails, workflows, and so on) and match them to your personas. This will help determine what existing content is appropriate for which persona. From there, you can create new workflows in HubSpot for each buyer persona and, based off of our sales team’s feedback, you can determine which personas have longer or shorter buying cycles, allowing you to adjust the workflow for delivery timeframe. Using Hubspot in this way helps you constantly refine and perfect your buyer journey from marketing through sales.   

HubSpot and Salesforce for sales and marketing alignment

As we’re sure you’re aware, Hubspot and Salesforce are both sales, CRM, service and marketing tools. They are two very similar platforms, so naturally, they overlap and are able to integrate to help facilitate your sales and marketing alignment. Having a HubSpot-Salesforce integration lets you seamlessly pass data between the two tools to maintain consistency between your marketing and sales teams. You need to build an infrastructure on which to streamline both platforms to their full capacity. Some of the benefits of doing this include improving the customer experience (by responding to customer requests and behaviours in real time, for example) and providing sales teams with better-qualified leads.

Earlier, we highlighted the importance of personalisation to the modern buyer: integrating these two platforms can help with this. You can use details from Salesforce contacts or accounts to personalize Hubspot marketing emails, segment your database, or send emails on behalf of a lead’s assigned sales rep.

Additionally, as your sales team transforms leads into customers, Salesforce will send revenue data from closed-won opportunities to HubSpot, letting you tie specific marketing campaigns to real revenue.

Here is an example of how Hubspot works with Salesforce to align sales and marketing:

Use case:

The sales team of one of our clients (a 500 person company) were using Salesforce and the marketing team were using Hubspot.

In the diagram below, leads come into Hubspot via various touch points: Events, SEO, PPC, Content Marketing etc

The leads are then assigned to a Business Development Rep (BDR) in Salesforce (SFDC), based on the MQL criteria defined in Hubspot. If leads do not meet the MQL criteria, the contacts are nurtured in Hubspot until they become Marketing qualified.

The BDR then qualifies the MQLs and changed them into Opportunities for Account Executives to follow up with.

Where do we go from here?

Call your first Smarketing Meeting

The purpose of your initial Smarketing meeting will be to do the following:

Define your goals

Outline the current process for setting company goals and translating them into goals for sales and marketing. Is this process clearly defined? How well do all company employees understand it? Consider the relationship between marketing and sales in your company: Do they have shared goals or separate goals? How closely are their goals aligned?

Sales and Marketing alignment goal setting

Agree on the metrics that show whether you are moving the needle: Revenue.

Sales and Marketing alignment metrics

Agree on Target Buyers

Work together to agree on a target buyer. What characteristics make a person or organization a good fit for your software? How do you know this? Are there any factors that make someone a bad fit?

Outline processes

Detail how you currently pass leads between marketing and sales. How well is this process understood by your sales and marketing teams?

Note down the processes you have in place to align marketing and sales – regular meetings, reports, service-level agreements, for example. How effective are these processes? What could be done to improve them?

Content creation

Outline the current content creation process at your company. Who manages it? What other team members are involved? How effective is the process? If you don’t have a defined process, describe any efforts your company has made to produce content. Detail how content is used in your sales process. Does your sales team use the content that marketing creates? Do they know where to find it when they need it?

Design your vision

You should be able to outline your company vision in less than 5 minutes. Once you have the vision in mind, you need figure out how much it will cost to get you there. Then you need to consider how that cost compares to the resources you have on hand and how much more revenue you need in order to make the vision a reality.

Once you have defined your vision and the costs involved, you need to convert it into tangible goals for your Smarketing team. The first step in doing that is developing a good lead qualification framework. To do that you need to….

Agree on an ideal customer profile

You have to understand what makes someone a good fit for your offering, and creating an ideal customer profile is a great way of doing so. An ideal customer profile is a list of basic qualities that a potential customer needs to have to be considered a good fit for your business. The best way to create your ideal customer profile is to get team members from sales and marketing together to agree on what attributes your best customers have in common.

Here are some questions that should help you get started:

  1. Are there any economic factors that make a customer ideal or not? Number of employees, revenue, customers, etc.
  2. Are there market segments that are ideal or not? Industry, vertical, etc.
  3. Does geography affect the customer’s potential?
  4. Are there any legal standards that are required to purchase your software?
  5. What other attributes make a buyer ideal or not ideal?

Going Forward

You can do this by using the POP model – this stands for purpose, outcome, process:

Once you have the groundwork laid, you will want to meet regularly to keep your goals aligned and feed back to one another. Your ongoing meetings should focus on identifying and solving problems.

Purpose = the reason an item needs to be addressed.

Outcome = what needs to be accomplished before the meeting closes.

Process = the way that outcome is going to be achieved.

For example:

Marketing’s lead closing rate isn’t as expected.

Purpose = Figure out why the close rate is low and how to fix it.

Outcome = Specific action items for fixing the close rate.

Process = Identify the root of the problem, then develop a possible solution, and create a plan for implementing it.

Tip: Having a rule that requires every item on your smarketing agenda to have a POP will make your meetings more productive.

Think about who should regularly attend your Smarketing meetings. Try not to make these meetings too large; they don’t need to involve every team member, especially if you’re a large organisation.

If you’re a small company (e.g. your combined marketing and sales teams amount to fewer than 10 people) you can start by inviting everyone. If you’re in a larger company, you might want to consider setting up a rotation so each team member gets a turn while ensuring the meetings contain no more than 10 attendees each time.

Running a Smarketing meeting

If you want your Smarketing meetings to be successful (i.e. productive and collaborative), you need to ensure the teams see them as a place of safety – this will allow them to be comfortable taking risks around each other. They won’t be afraid of admitting to mistakes or asking “stupid” questions or voicing their new ideas. If your meetings don’t foster an environment of psychological safety, attendees will be hesitant to contribute.

This should leave you with some actionable steps to take to start aligning your sales and marketing departments to create the ultimate Smarketing team.

Actual weekly Smarketing Agenda for a Saas Company

Objective: How are we tracking compared to the weekly / monthly target

Focus : Very short term / tactical / metrics driven

Audience: Sales and Marketing + Exec

Time : 30-60 minutes

MetricsVisitors

MQL

Trial

SQL

Activations

ARPU

New MRR

Expansion

Churn

So, to sum up, rather than the sales-driven funnel as it used to be, aligning sales and marketing steers you towards a more cohesive marketing-driven sales funnel. Sales and marketing teams should go hand in hand as one department in order to attract, inform and retain customers using consistent messaging across both marketing and sales efforts. Aligning these two departments into one single “Smarketing” team plays a crucial role in cementing the future success of your business.

Need help aligning your Sales or Marketing teams? Let us help you.

Don’t forget to leave your comments below.

Enterprise & SaaS Marketing using the power of Linkedin

When it comes to B2B marketing there are fewer tools better than LinkedIn.

In fact, LinkedIn state that 97% of B2B users use LinkedIn for their content marketing efforts and that 78% of B2B marketers state that it’s the most successful social media platform when it comes to achieving their goals.

It’s particularly helpful if you own, or work, for a SaaS company. LinkedIn allows you to connect with the decision makers at the businesses you want to target.

What is SaaS marketing?

SaaS marketing is the process of promoting a service that your company can provide. The key to ensuring success is understanding that it’s not just an app that you are selling but a service that the customer is happy to pay for on a monthly or yearly basis.

Unlike other traditional marketing, with saas, you are selling something that is intangible. It’s worth remembering that your customer has an issue and you have the solution to that problem.

SaaS marketers need patience and have a keen eye on what is known as “lifestyle marketing”.

As customers are paying you monthly, your concern isn’t about bringing them back but instead ensuring that they love the product and buy into your company to prevent churn.

Saas customers paying monthly

SaaS marketing has become incredibly effective as companies are moving away from inhouse network and IT teams and are favouring products with a cloud infrastructure.

As a SaaS company, it’s important that you focus on growth. Establishing a good customer base and having companies trust in your product is difficult.

What is Enterprise marketing?

Enterprise marketing is the process of marketing your saas product to large enterprises.

Sales cycles are generally long averaging 4.5 months, though some sales cycles may be as short as 3 days.

As Christoph Janz put it, when it comes to enterprise marketing, you are hunting “big game” therefore the key is to focus.

Focus on the target buyer persona and the marketing channels which has the potential to deliver the most ROI.

Click here for our Saas Marketing Buyer Persona template.

In general, enterprise marketing channels include Events Marketing (Conferences, Dinners, Seminars, Trade Shows etc), Partner Marketing, Inbound Marketing, Organic and Search.

Once you are a 100% clear on who you are targeting, the next question you should ask is: how do I target these customers?

Enter LinkedIn

Over the years, Linkedin has become much more sophisticated as a marketing channel for the B2B Saas companies.

First off you need to create a LinkedIn company page, if you don’t already have one.

Creating linkedin page

The biggest thing to consider when setting up your LinkedIn company page is which featured groups you want to display.

Leveraging the use of groups is a fantastic way to get some traction on LinkedIn.

This is a great way to communicate with your potential customer base. Also, it has come a long way in recent years and is much easier to navigate.

Highlights of the group are curated and you can also contact the admin of each group. This is a particularly good idea because for a small fee they can pin your article/product to the top of the page.

Linkedin group profile example

LinkedIn will also look at the groups you are joining and give you recommendations based on your activity.

Linkedin groups

If you are thinking of becoming a thought leader or influencer in your industry you definitely need to consider creating a group of your own.

You have the option to create rules and also whether you want the group to be visible or not in search results.

If your group is unlisted it can add a bit of inclusivity to it and make people feel they are part of a community.

The important point to remember with groups though is to not be overly salesy and becoming an authoritative voice offering sound advice is a much better approach.

Linkedin Group rules

Finding the right people on LinkedIn

As we mentioned earlier LinkedIn is fantastic in reaching out to the decision makers within companies.

LinkedIn allows you to target people by their connections, location and also what company they work for.

Do you have leads from certain companies? If so, reach out to the decision makers within them by using the search below.

Finding people on linkedin

Once you find the people you would like to contact you can use the paid InMail option.

This allows you to promote your product or a piece of content right in their inbox. All the designs from LinkedIn are mobile responsive and messages are only delivered to people who are currently active on LinkedIn.

inmail

How LinkedIn can help you with your account-based marketing

Firstly it may be helpful to explain what we mean by account-based marketing.

ABM is a type of marketing that is mostly executed by enterprise organisations in the B2B sector.

It targets an individual within a company as well as the company itself, which is why it goes hand in hand with LinkedIn’s people search.

If you haven’t decided already it’s best to figure out who you believe the decision-makers or purchasers are within the companies of your target market. This information may already exist within your company so it’s worth asking.

How to target specific companies on Linkedin

LinkedIn allows you to match your companies list against the 13+ million LinkedIn pages they have on their system.

Via a CSV file, LinkedIn allows you to upload a list of 300,000 companies. The next time you are in your campaign manager screen you just have to choose Match based on a list of accounts to target your audience.

adding account list in linkedin for account based marketing ABM

Be aware that if you are looking to target straight away that it may take up to 48 hours for your list to populated in LinkedIn.

There are a few elements to bear in mind when uploading your account list for targeting:

  • Use LinkedIn’s template to ensure proper formatting
  • Remove all formatting from your spreadsheet such as quotations before uploading
  • The larger the list, the better chance of matching. Therefore ensure you have a minimum of 1,000 contacts
  • Avoid adding too many filters to your campaigns as this can limit your scope

If you need help with B2B, Enterprise Saas marketing or Account Based Marketing, let’s have a chat.

How to target specific people on Linkedin

As we mentioned above you also have the option to target individual people based on your email list. This is fantastic for turning leads into sales.

It’s worth separating your lists into three categories in order to delivered tailored messaging for your SaaS product. These lists could be:

  • Leads to convert
  • Customer retention
  • Winning back churned customers
Linkedin campaign manager with email lists for enterprise marketing

You are also able to integrate LinkedIn with your content management platform. This ensures that your list will automatically upload in LinkedIn when you’ve generated a lead.

Similar to account targeting there are a few elements worth considering:

  • Remove all formatting and use the LinkedIn template to ensure proper formatting
  • Consider uploading a list of at least 10,000 contacts to achieve the best results
  • Similar to account ads, avoid hyper-targeting and using too many templates

Using Hubspot to notify your sales team when a lead has been generated

Tailoring your messaging to your contact lists will help lead them down the funnel. But what happens when they are hot and are close to becoming a customer?

Once leads are submitted on Linkedin, using a tool such as Hubspot allows you to sync the leads automatically to your sales team for a quick follow up and potentially close.

Don’t have HubSpot? thats ok. Get a 25% discount on Hubspot on us.

Hubspot also allows you to see additional contact information about a person once they have completed a form on your site. This includes their job title as well as their social profiles.

Hubspot profile

You also be able to see how they were referred to the website and what they do on your website even after they have completed a form.

All this information is completed in a nice timeline which is great ammunition for your sales team. From this they will be able to see what features they like most about your SaaS product before contacting them.

Hubspot also offer in built analytics which can give you insights in to which pages, offerings and referral sources are driving the most conversions for you.

Seeing how users navigate your site and which pages have the most value is vital to spot trends and drive more people to convert.

Hubspot Sales dashboard example

How your sales team can use the Hubspot Sales Extension

Hubspot has a Google Chrome sales extension that you can add to your browser.

One of the main benefits of it is that it allows you to track and log emails with your leads. This allows you to receive pop-up notifications when your recipient opens or clicks a link in the email.

Hubspot sales extension email notification

The emails will also log within the customers profile so that you can see what communications have taken place and identify where they are in the sales process.

Hubspot also gives you the opportunity to schedule emails within the system. Hubspot looks at the time and days that have been most successful in regards to the emails and schedules them at an appropriate time.

There are an array of Hubspot tools that you can access directly through Gmail which is very beneficial for your sales team. This helps you speed up the process and reduces the admin time.

For example you can add commonly used snippets which appear underneath the subject line.

Hubspot snippets

You can also save whole templates as well as track what documents or attachments are the most popular with your leads.

Your sales team can also save meeting or webinar links. This is very handy for the person in your sales team responsible for product demos.

Conclusion

If you are an enterprise company looking to promote your SaaS company then LinkedIn is the most powerful tool you can use.

If integrated with Hubspot this can transform your sales funnel to the next level. It’s vitally important however that you have an idea of buyer personas and which teams will be involved beforehand.

LinkedIn advertising should take place as part of a multi-channel marketing strategy that strives to raise brand awareness. Reviewing your analytics and basing your marketing efforts based on solid results throughout is a great way of ensuring a positive ROI.

If you need help with B2B, Enterprise Saas marketing or Account Based Marketing, let’s have a chat.

If you enjoyed the post, please leave a comment below.

How to Identify a Product Qualified Lead (PQL)

The marketing qualified lead, or MQL, has long been an important and familiar term in B2B marketing. It’s used to identify when a prospect has moved far enough in your marketing funnel (and in their buyer’s journey) to demonstrate buying intent. However, the SaaS industry innovates quickly, and a new type of qualified lead has joined our ranks. The product qualified lead, or PQL, is used to identify a prospect that has signed up to use your software firsthand and provides even greater visibility into buying intent based on how they’ve interacted with your actual product. So move aside MQL! Let’s explore how to identify a product qualified lead.

Why PQL?

Thanks to the internet, buyers have access to more information today than any previous generation. Everything they need to research your product and assist in their buyer’s journey is available in seconds. This has caused two buying phenomenons:

  • Analysis Paralysis: With so much information available, some buyers will feel compelled to read as much as they can before committing to a purchase. This act leads to a buyer getting moved down your marketing funnel into an MQL when they’re not really ready to make that decision.
  • Try it Before you Buy it: On the other hand, with so much content at the ready, other buyers will feel as if the only way to make a decision is to try your product out before committing. This means they won’t read as much content and won’t get flagged as an MQL, but in fact they’re ready to take a next step.

In both situations, your MQL designation isn’t providing quality leads to your sales team for continued nurturing. In both situations, neither prospect has access to your software until getting marked as an MQL. And so enters the PQL: a new qualification criteria centered on offering access to your software and identifying buying opportunities based on a prospect’s interaction with the platform.

What is a PQL?

Transitioning to a PQL system enables your prospects to use your software prior to purchase (on a free trial or freemium version). As prospects utilize the software, they demonstrate buying intent based on criteria related to bottom of funnel product behaviors rather than middle of funnel marketing ones. This criteria can include:

  • Product interest
  • Number of users
  • Features used
  • Spending patterns
  • Usage patterns

After setting your desired mix of product activity, you can flag a prospect as a PQL and have a purchase discussion with an individual who understands what you’re offering and has more clearly demonstrated their intent to buy. As a PQL, prospects haven’t just downloaded a bunch of your gated content — they’ve shown real interest in your actual product.

This system also lends itself to a more frictionless marketing funnel as your best leads are already using your software. You’ll devote fewer sales calories convincing them to purchase and more time providing even greater value to the relationship.

The Takeaway

The cost to acquire a new customer can already be exorbitant. A PQL mindset can save you time and money by better identifying even better leads for your sales team. Prospects using a free trial or freemium version of your software are already customers, so put them at the center of your marketing flywheel. It can be tempting to keep chasing down fresh leads, but the best ones are already right in front of you. (Just remember, they’re “customers” and not “leads”, so your goal isn’t just to sell, but to help and add value.)

Source: Openviewpartners.

How to Do ABM With Hubspot

Account-based marketing looks slightly different depending on who you ask. But at its core is one central theme: the idea of company-centricity.

If you’re B2B, you’re selling to businesses. Generating five thousand leads doesn’t matter much if those leads aren’t within the businesses you want to sell to. This idea of company-centricity applies to everything in ABM. You generate accounts (rather than leads). You engage with all the key stakeholders within those accounts. You close accounts. And you measure account engagement and growth.

What is ABM Not?

More often than not, the concept of ABM is associated with targeted outbound. It looks like this: choose a set of companies you’d like to market and sell to. Use online databases to build an org chart for those companies. Use tactics like cold email and calls, direct mail, and live events to engage the key stakeholders at those accounts that you found in your research. Close deals with those accounts. Then “land and expand” into other parts of the business using similar tactics.

This outbound-heavy interpretation of account-based marketing is misguided and miserable.

We see examples of soul-less ABM emails all the time. I’m sure you do too. Rather than call any one company out — here’s a compiled fictional example of the types of targeted outbound emails we get.

abm email.png

Now, technically this is an account-based email.  It reflects a unique data-point on my company: The Business Insider article.  It demonstrates the land and expand practice of branching off of a colleague of mine’s interest. But it still feels cold, right?  There are a few things wrong with this type of ABM email from a recipient experience standpoint.

First, even though my colleague had an interest — there’s no consideration as to whether I even know that colleague or a demonstrated understanding of how or if we work together.

Second, while I appreciate the mention of the recent article on us, it has nothing to do with the purpose of the email. It almost feels as though it’s in there just to prove that the sender took the time to Google us. Crummy experience for the recipient. Poor results for the sender. Nobody wins.

So, even though the email is personalized to my context — It still feels like cold outbound and odds are, I’m not going to bite.

My email inbox is littered with emails like these. So is my voicemail. What about yours?

The good news: ABM doesn’t have to look like this. There’s a better way. One that’s warmer, more human, and a whole lot more buyer-friendly.

How to do ABM the Right Way

What does ABM done right look like? In this section, we’ll walk you through it, step by step.

Get specific about your target.

Who do you want to market and sell to? Imagine your ideal customer were to walk through the door. What would they look like? What would they sound like? What would they talk about? We call these ideal customer profiles buyer personas.

A few important best practices to remember when creating your buyer personas, as it relates to an account-based strategy:

If you’re B2B, your personas should include insights about the person’s company. What size is it? What role do they play? Who do they report to? Are they a decision-maker or an influencer? What’s their budget and what other things are they spending it on? What industry are they in? Where are they located? What other tools do they use? While, in the end, it’s the people that make the buying decisions, their company dynamics play a big role in the purchasing process.

It’s perfectly okay — and, often, necessary — to have more than one persona in the same company. At HubSpot, we sell both marketing and sales software, so it’s vital that we understand the core characteristics and motivations of both marketing and sales leaders. Sometimes, the same person plays both roles. More often than not, we’re marketing to the two separately. To do so effectively, we need to understand not only the nuances of marketers and salespeople individually, but also the way they interact in the workplace.

Marketing and sales should be tightly aligned in the creation of personas.Personas aren’t an arts-and-crafts project undertaken by the marketing team on a rainy day. They’re the glue that holds every function at your company together. If you’re a marketer, take into consideration your sales team’s feedback on the types of accounts they’re interacting with most.

What generalizations can they make about the different types of customers you serve best? If you’re a salesperson, what lessons can you pass along to your marketing counterparts from the front lines? What’s driving conversations forward? Sales and marketing should be in lockstep throughout the inbound process; that’s especially important in the creation of personas.

A common question that often comes up around personas and ABM: if you’re B2B, should you select one specific set of a few companies to target? The simple answer: in general, no. Even if your target “universe” of potential customers is small — big banks, universities, etc. — think about what your target persona has in common.

Let’s say your primary decision-making persona is the VP of risk management at a big bank. Do the VPs of risk management at Wells Fargo and CitiBank have vastly differents sets of motivations and priorities? Do they hang out on different social networks? Are they concerned about different changes in the market? Probably not.

The personas you create should be very specific to your best customer fit, but broad enough to be applicable beyond a single person at a single company.

Create valuable content for those personas.

Next up: creating content. ABM and Inbound are in lockstep here. Once you’ve gotten clear on your target, it’s all about creating content that’s personalized, relevant, helpful, and valuable for your potential buyers.

The bitter truth: today’s buyer doesn’t care about your company. They don’t care about how you’ve just launched the coolest widget since sliced bread. They don’t want to book a 15 minute meeting with you, if they’ve never heard of your company. They want things that’ll make them better at what they do, or teach them something they don’t know, or fill in a blind spot in their day. Even better if it makes them look good to their colleagues and managers.

How do you ensure that you’re creating content your target personas will actually want to engage with? By combining two key concepts: personas, which we covered above, and the buyer’s journey. The buyer’s journey is the process buyers go through to become aware of, evaluate, and purchase a new product or service. The journey is a three-step process:

  • Awareness Stage: At this point, a buyer is trying to solve problems, get an answer, or meet a need. They’re looking for top-level educational content to help direct them to a solution.
  • Consideration Stage: The buyer defines their problem and researches options to solve it. In HubSpot’s case, our customers might realize they have a problem organizing and managing their sales processes, and in the consideration stage, they’re considering the different strategies for addressing that: Excel, adopting a CRM, outsourcing sales, etc.
  • Decision Stage: The buyer chooses a solution. In HubSpot’s case, our buyers have determined that they’ll adopt a CRM in the consideration stage, and now it’s time to compare HubSpot to the other CRMs, and to make a final decision.

Once you’ve defined your personas and mapped out the buyer’s journey for each one, the next step is to ensure that you have at least one piece of content for each of your personas, at each stage of their journey. Here’s how to visualize that process:

buyers journey content map.png

Whether you’re B2B, B2C, or anything else, this process is pivotal. The best part: its simplicity. You’re answering two questions: who’s your product or service for, and what does their path to you look like? Answer those questions, and you’re well on your way to an effective content strategy.

Get that content in front of the right people at the right companies.

Once you’ve mapped out and created your content, you’re ready to ship it out into the world. The key concept: engage with your personas where they’re at. But how do you do that? In the world of traditional ABM, you’d use targeted outbound: a combination of cold emails and calls, direct mail, and other strategies.

But how can you get your content in front of your most important accounts without using ineffective interruptive tactics? HubSpot Partner Kuno Creative puts it well (in this case, IBM is a target account):

It’s not as hard as it sounds. First, I create blogs, some visual content like an infographic and maybe a video or podcast about a very specific topic that I know will interest the IBM account team. I publish my content on our website and promote it using search engine marketing and paid media ads with messaging and keyword phrases that highlight the benefits to the account team.

I even mention IBM, possibly even the people on the team, in my content and social media posts. Companies like IBM are always looking for company mentions on social media and are likely to pass them along to their team members. Once I get their attention and attract them to my website, I can use retargeting strategies to remind them of our content and bring them back for more.

Remember: how you promote your content depends entirely on your target persona. Are the members of the account teams at your ideal customer companies on LinkedIn? Quora? Do they go to industry meetups? Do they follow other industry blogs? When they search on Google, what do they search for? Align your content promotion with your persona’s defining patterns.

As you create relevant content, the stakeholders at your target accounts will naturally come to you. In traditional ABM, a fishing analogy is often used: ABM is spear-fishing, whereas inbound is casting a wide net.

Think about it this way: what good is spearfishing if there aren’t any fish within a mile of your boat? If there aren’t any fish to catch, it doesn’t matter whether you use a net or a spear; you’re out of luck. Your content is your bait. It’s what brings the people that matter into your company’s sphere of trust and influence.

Turn interest in your content into truly engaged leads using your conversion method of choice: landing pages, pop-up forms, or live chat.

Identify your Accounts

Let’s say you’ve done all the right things so far. Defined your personas, including company characteristics. Created content and put it in front of the right people at the right companies. And actually generated interest and engagement from companies that fit your target persona. What happens next?

If you didn’t choose a specific set of accounts on which to focus your efforts during your persona development, now’s the time. What’s the best way to home in on the right accounts? Here are a few ideas:

  • Dig into what you know about the company. Explore both demographics, the job titles and other traits of the people in your database, and firmographics, the characteristics of their companies (size, industry, location, etc.). Match up the data you’ve collected on your leads and accounts with the personas you put together at the beginning of the process.
  • Work closely with your sales team. They’ve worked accounts before. Chances are that their gut on what makes a good-fit account is spot-on.
  • Think in terms of revenue. Which of the accounts has the potential to bring the most business at the end of the day?
  • Use account scoring to determine which accounts are actually engaged with your company, and how many contacts at each one have interacted with you.Here’s what that looks like in HubSpot:Account score.png

Once you’ve decided on your target accounts, use your automation tools to mark the target accounts in your database:

set target account.png

Pro tip: Use tools that make tracking companies easy. A filterable database of companies and an integrated company profile — where you can see all associated contacts, create custom properties, communicate with your contacts at the company, and view all past and future engagements — are two absolute musts.

Company profile.png

Expand your Reach

If you’re B2B, the natural next question is: how can we make sure to engage more than just one member of the buying team at an account? Here are two ideas to get your mind rolling:

  • Create content that helps one persona influence another. As an example, at HubSpot, we created an offer called “100 Stats, Charts, and Graphs to get Inbound Marketing Buy-in.” It’s designed to help a marketing manager make the case for inbound to his or her management team, and has helped our marketing and sales teams to bring the decision-makers into the conversation.
  • Make your content easily sharable. Include sharing links on your thank-you pages and in your follow-up emails, to help get more of the buying team exposed to your content.

sharable content 1.png

Nurture your accounts using company-level insights.

Once you have an engaged audience within a target account, use company-level data to continue the conversation with those accounts, and pull them through your marketing funnel. The best ways we’ve found to do that:

  • Create drip email campaigns. Below is an simple example. The workflow enrolls contacts within target accounts whose title includes “marketing,” sends them a specific nurture email, then alerts their account rep if they’ve opened the email.Sample nurturing flow.png
  • Website personalization. Adapt the content on your website to specific audiences based on both lead and company intelligence. For example, show a VP at one of your target accounts a specific call-to-action when they land on your pricing page next time around.
  • Online ads. Ad platforms today are a whole lot more sophisticated than they were even five years ago. Show ads to your target buyers that align with their specific context — in just the right places online. Use an ad platform that syncs with your CRM to show personalized, targeted ads to the members of your target accounts. Many of these platforms even automatically update your ads as new data is added to your CRM.

Report on Company Engagement, not Just Leads

If you’re B2B, contact-level metrics like leads generated and website conversion rates only tell a part of the story. ABM requires a deep understanding of the company-level dynamics too. Here are three reports that our best customers use to report on their ABM success:

  • Growth of companies over time. How many companies are in your database? Break down your chart by lifecycle stage — to determine how many marketing-qualified accounts you’ve generated — or by original marketing source.New Companies by Source.png
  • Reach within target accounts. How many contacts from each of your target accounts do you have in your database? How engaged are they, from a high level?Reach within Target Accounts.png
  • Breakdown of contacts within a specific target account. What job titles do your known contacts hold? Are you generating enough interest from decision-makers? Where are your gaps? Use this report to find out.Contacts by job title.png
  • Engagement of contacts within a specific target account. How engaged are the contacts within a specific account? Who are the most engaged?Most Engaged Contacts from HubSpot.png
  • Most popular content within target accounts. Of those most-engaged contacts, what type of content are they actually engaging with? Use this report to determine the most relevent topics with which to nurture those accounts.Most popular content within target account.png

The elephant in the room: Isn’t Inbound wasteful?

ABM experts sometimes bring up the idea that inbound and other popular demand gen strategies are wasteful, because they focus energy across a broad target, and end up producing leads that’ll never end up closing.

There are two vital questions to ask yourself as you think about spending your time on the right marketing strategies.

First, where’s the leverage, and which strategies scale? Leverage is the concept of using a small initial investment to gain a disproportionately high return. Put in a small initial effort, and see that effort yield exponentially greater results over time. The concept of leverage is especially important on teams with limited bandwidth.

At HubSpot, the leverage has come from Inbound. How do we know? Check out this stat: over 90% of our blogs leads come from old posts (i.e. posts published prior to the current month). That means the work we did last month, last year, five years ago, continues to pay exponentially greater dividends.

Put another way, if HubSpot’s blogging team took next month off, we’d still hit 92% of our lead goal. Will all those leads end up closing? No. Does every single one fit into our ideal persona? No. But because we’ve carefully mapped out our personas and created content that’s truly aligned with their motivations and goals, the blog continues to be the primary source of qualified accounts for our sales team.

As you think about ABM, apply this same concept. Where can you find leverage? If you’re working with four different internal teams to create a unique piece of content for each stakeholder within a specific target account, how does that scale? How does the output of your effort relate to the input? What happens when, inevitably, a big chunk of your target accounts don’t close? Where do you go for your next customer?

Second, which strategies give you the most flexibility to pivot over time? Here’s another example, from our own past. When we started HubSpot over a decade ago, we sold marketing software. We wrote content about marketing, and that content generated us a ton of leads. But that content did more than just win us customers in that moment. It positioned us as a trusted source of thought leadership, and gained us an avid following of brand evangelists: people who would support HubSpot, even if our product wasn’t a fit for them at that very moment.

But what about when HubSpot’s product improved? What about when we launched a new sales productivity tool in 2014, then a CRM in 2015? Because of that content we’d built years earlier, we already had a base of loyal followers ready to jump on the new tools.

If you focus your efforts closely on one specific set of target accounts, what happens when the market shifts, or your priorities change, or new technologies come about, or you launch a new product line? How do you find your early adopters and brand advocates?

Use these two concepts — leverage and flexibility — to inform how you combine ABM and Inbound.

Get intouch if you want to learn more about how to use Hubspot for Account Based Marketing (ABM).

Source: Hubspot.

The AIDA Model: A Proven Framework for Converting Strangers Into Customers

The AIDA Model: A Proven Framework for Converting Strangers Into Customers

In 1898, Elias St. Elmo Lewis, an eventual inductee of the Advertising Hall of Fame, anonymously wrote a column about three advertising principles he found useful throughout his career in a printing magazine called The Inland Printer, one of the most influential American magazines of the 19th century.

In his column, he states that a successful advertisement should always follow a specific formula.

“The mission of an advertisement is to attract a reader, so that he will look at the advertisement and start to read it; then to interest him, so that he will continue to read it; then to convince him, so that when he has read it he will believe it. If an advertisement contains these three qualities of success, it is a successful advertisement.”

In other words, copy is only good if it attracts attention, generates interest, and creates conviction, in that order.

Over a century later, Lewis’ principles still ring true. They’re expressed as an acronym, AIDA, and widely used in the advertising industry. In the digital age, brands have even based their entire marketing strategy on the AIDA model.

Before we cover how you can apply the AIDA model to your own content marketing strategy, let’s go over what it is and why it works.

The AIDA model is considered a hierarchy of effects model, which means consumers must move through each stage of the model to complete the desired action. In theory, as they progress through each stage of the model, consumers who learn about your brand will develop certain feelings or emotions about your product or service, which is what ultimately compels them to act.

Brands use the AIDA model to determine the way they should craft and distribute marketing messages to their target audience at each stage of the buyer’s journey. Just like a typical marketing funnel, each stage has fewer consumers than the previous one.

How to Apply the AIDA Model to Your Marketing

Attracting Attention

To boost your brand awareness, research your target audience’s problems and passions. Then, create content that solves their problems and focuses on their passions. Your target audience should be able to discover your content through Google, social media, or another website.

If your content can grab their attention and deeply engage them, your target audience will start to become curious about what your company actually does.

Generating Interest

Once your target audience is interested in your product or service, they’ll want to learn more about your brand, the benefits of your solution, and your potential fit with them.

To make it easy to learn about your brand, solution, and fit, feature your mission statement on your website, explain exactly what you do on your homepage, describe the benefits of your solution on your product pages, and offer ungated case studies.

Providing instant access to this information will help your target audience visualize a pleasant future with your solution in their lives.

Stimulating Desire

The prospects you’re most likely to close are the consumers who envision a future with you — they already enjoy consuming your content and think your product or service will be even better.

But to generate enough excitement in your prospects to compel them to act, you need to make sure their affinity for your brand hits a certain threshold.

To do this, keep serving them content. Make sure they subscribe to your blog, follow you on social media, and download your offers. The more prospects interact with your brand, the more they’ll trust you, boosting the chances they’ll eventually buy your product or service.

Spurring Action

After you generate enough desire for your product or service, give your prospects the chance to act on it. Place “request a demo”, “free trial”, and “contact sales” CTAs on your homepage, pricing page, and product pages. After all, what’s the point of creating content and building deep relationships with prospects if there isn’t a clear next step?

A Proven Formula

The AIDA model is a sturdy framework for guiding your audience through the buyer’s journey and spurring them to act. And if you apply it to your content marketing, you’ll be leveraging a proven formula that can consistently engage, persuade, and convert an audience into customers.

Source: Hubspot

Lessons from ZipRecruiter: Building a Sales Org From Scratch in a Product Led Company

When Kevin Gaither was hired as the forty-ninth employee at ZipRecruiter, the closest the organization had come to talking about sales was to say that they didn’t want to have a call center. A leading online employment marketplace, ZipRecruiter had experienced astronomical growth since launching in 2010. To-date, the company has helped more than 1.5 million businesses of all sizes find great candidates, received more than 430 million job applications, and currently has more than 8 million jobs listed on their site. But, five years ago, as Kevin was coming on board to build—from scratch—what is now a 300-person sales team, the company hadn’t even begun to tap into sales as a way to grow the business.

A product-led company, ZipRecruiter initially started out leaning heavily on improvements in product design and engineering to increase their conversions. But at a certain point, the team was able to look past their product-led biases long enough to consider how a sales team might help their efforts.

As Kevin tells it, the a-ha moment came when he sat down with ZipRecruiter’s CEO over lunch to talk about whether they might have a sales opportunity on their hands. The CEO explained that ZipRecruiter had more than 9,000 people coming to the site each month—each one registering with name and detailed contact information—but they weren’t always converting to be subscribers. “The CEO asked if I thought I could do something with that,” Kevin quips, adding, “That’s when the sushi literally fell out of my mouth.”

Long story short, with his twenty-four years in sales, Kevin was definitely able to “do something with that.” I had the chance to talk with him about the experience. It wasn’t always a smooth ride, but there were many valuable lessons along the way.

Groundwork: Establishing the Role of Sales

One of the first challenges facing Kevin as he began conceptualizing the sales strategy for ZipRecruiter was figuring out where to draw the line between product-led efforts (self-service and e-commerce models) and sales-led efforts.

“When I was first brought on, the sales team was almost charged with looking for change in the cushions,” Kevin recalls. The process was sharply delineated with one silo for the e-commerce funnel and a second, very separate one for sales. The second, sales funnel was filled with anything that didn’t automatically convert through e-commerce, and it was Kevin’s job to turn those leads into incremental MRR.

The initial shift in perception (and eventually process) came only after the team was able to recognize and understand how sales added value that more than offset its cost. Early on, the general consensus was that having a salesperson on a call was extraneous if there was already a customer success agent present. But, over time, the team began to realize that each of those roles is designed for a very different and distinct purpose. A customer success person can handle a wide variety of conversations, but they aren’t trained or incentivized to bring in extra revenue. Salespeople, on the other hand, are hired to be conversion machines.

In the end, they tested by sending a segment of leads to customer success and another segment to sales. As a result, ZipRecruiter’s process for segmenting leads to the two teams evolved. Now, if a customer success agent’s conversation starts getting into pricing or plan comparisons, that call gets transferred over to sales.

Metrics and Measurement: Making Sure It’s Working

Once you’ve got your sales team up and running, you’re going to want to quickly get clear on two things: how to identify which customer profiles belong in the sales funnel and how to measure sales success.

For the first, Kevin recommends using lead-scoring algorithms—either purchased or developed in-house—to start scoring out leads. The investment, he says, will more than pay for itself. It’s important to be able to segment leads to the appropriate funnels (e-commerce vs. sales) because misjudgment at this stage can result in saddling sales with an avalanche of unprofitable leads.

Before they found the right balance, there was a point at which each ZipRecruiter salesperson was given 20 to 50 leads per day. On the surface, that might sound great, but in reality it didn’t pan out. “It’s actually a nightmare, like that old I Love Lucy episode where the candy is coming down the conveyor belt,” Kevin explains. “They’re just trying to stuff candy in their pockets and in their mouths, and it’s a disaster. You’re not getting that throughput.” What they found was that the leads were predicted to convert so poorly and the revenue per lead was predicted to be so low, that the sales reps couldn’t be expected to handle the massive workload. Instead, they shuttled those leads to e-commerce and marketing and assigned more appropriate leads to the sales team.

On the measurement front, Kevin keeps things really simple by focusing on only two metrics: revenue per lead and the productivity of the salesperson. On the revenue per lead side, it’s important to have a full understanding of what that looks like across marketing, sales, and product. You have to evaluate on a cohort basis—sales versus e-commerce, sales with e-commerce, manager to manager, and so forth. On the salesperson productivity side, Kevin looks at MRR per rep per day. The approach of combining these two measurements is one he has seen work for many world-class, product-driven organizations; and it’s one that works well for ZipRecruiter.

Sales Integration: Building a Stronger Company

A critical part of getting a sales organization to run like clockwork is successfully integrating it with the rest of the company. After all, sales can’t exist in a vacuum, and—ultimately— many teams within a company are driving toward the same goals. There are some extra challenges in this area for the product-led company that brings sales into the mix after their core business has already been established. For ZipRecruiter, the integration happened in phases.

The key to getting things moving in the right direction was good communication. When sales first started up at ZipRecruiter, there were situations in which product would launch something, but the salespeople wouldn’t find out about it until customers started asking questions the next day. “It’s about working together instead of one team doing their own thing and assuming sales will figure it out,” Kevin says. “Having worked with the Chief Product Officer and VP of Product, I understand that they want to move fast and break stuff. That’s fine; I just asked that they give sales a little help.”

From no communication, the first baby step toward integration was the Head of Product sending a long, last-minute email to alert the sales team a few hours before launching something. The next step was the addition of someone who was, in essence, the go-between for marketing, product, and sales. This person’s job was to get a little ahead of those last-minute notifications and make them more palatable and sales friendly. Eventually, that evolved into having a product marketing employee attend sales meetings, giving them the opportunity to unveil the latest product developments as well as what was being tested in e-commerce and direct marketing. At the same time, the internal communication evolved from a simple “alert” email to a more robust collection of content that includes knowledge articles and videos.

Over Kevin’s first couple of years, the relationship between sales and the rest of the company went through a major transformation. In a moment of clarity, the CEO shared with Kevin the realization that the whole process is not a series of silos, but an interlocked circle. “He saw how marketing works with e-commerce and e-commerce works with sales and sales works with the account management team, and everyone works together in this circle of life, if you will,” Kevin explains. “He also acknowledged that the company’s future growth depends on sales because marketing and product depend on sales to improve lifetime values and reduce the cost of acquiring customers. It was an eye-opening moment.”

So, ZipRecruiter went from being a company that equated sales with a “call center” to being a company that fully understands and embraces the integral role of sales across the entire company; and the shift has served them well.

The post Lessons from ZipRecruiter: Building a Sales Org From Scratch in a Product Led Company appeared first on OpenView Labs.

Source: Openview

How to Effectively Test Your Pricing

Testing alternatives has become a standard practice in marketing. About ten years ago I was at a seminar led by Google on A/B testing ads. Small, apparently meaningless, changes to wording can give large, 7x or more, differences in click through rates. It was a compelling demonstration and I have been an advocate for A/B testing ever since.

Over the past decade, A/B testing has moved from cutting edge to common practice and it is now well supported by platforms like Optimizely and Unbounce. Of course, comparing text or images on one page is just part of the story. It can be even more important, especially in the context of pricing research, to compare different paths. Fortunately, there are now some platforms that let you do this as well, like Split, and testing is becoming central to user experience research.

A/B testing in pricing

Pricing is the critical P in the four Ps of marketing (Price, Product, Promotion, and Place). With A/B testing so important to other aspects of marketing, how is it being applied to pricing?

This can be a tricky question for B2B marketers and pricing leaders. The Internet remembers what you have done (remember the Wayback machine) and past prices frame current prices. Some B2B contracts even include clauses that require you to provide your best price retroactively, so a pricing experiment can have a cascade of effects. Then there are the legal and ethical issues of offering different prices to two different users at the same time. Pricing experiments are tricky.

So how can you leverage the power of A/B testing and other experiments in pricing?

The first thing to do is to build out the set of hypotheses that you want to test and see how they interact with each other. You need to know what order to test things in before you figure out how to test them. There are two ways to do this: goal-based and action-based.

Goal-based vs. action-based testing

Goal-based testing is all about uncovering the assumptions behind your goals and then systematically testing to see if the assumptions are true (or can be made to be true). Pricing goals generally address four things:

      • Market growth (making the pie bigger)
      • Market share (getting more of the pie)
      • Revenue growth (growing the top line)
      • Profit growth (generally gross profit and not net profit)

These days there is often a fifth set of goals around unit economics: Customer Acquisition Costs (CAC), Lifetime Value of a Customer (LTV), the ratio of LTV/CAC and the number of months to recover CAC.

The other approach to generating hypotheses is to think through the actions you could take and what has to be true for you to want to take that action. There can be different reasons to increase price, particularly because they are governed by your overall business strategy.

      • Price levels (increase or decrease prices)
      • Price curve (change the relationship of prices in a tiered offer)
      • Price metric (find a new unit in which to price)
      • Packages (change what is included in each package, modify the fences that guide a buyer to one package or another)
      • Value messages (test different value messages)
      • Order of presentation (change the order in which different value messages and pricing are encountered)

Tiered pricing architecture

How do you test to see if you can raise prices in a tiered pricing architecture? To do this effectively you need to know the role of each tier in your pricing strategy. Are tiers meant to capture demand at different levels of willingness to pay or are they a conveyor belt with each tier being a step on an upgrade path?

In the case of the former, what do you think the volume demand is at different levels? You probably don’t know this in absolute terms, but you can write down your assumptions, work out the implications, and then check to see if the implications show up in your data. You can then start adjusting prices to bring them in line with your assumptions. When the market opportunity is at the low end of the market (in revenue or volume depending on your goals), you will likely end up with a convex pricing curve across tiers as Hubspot has.

In this case, the price of the highest tier is often to frame the target tier. In Hubspot’s case this is the Professional tier, which looks like a good deal when compared to Enterprise.

To test these framing effects, it’s best to increase the price of the tier immediately above your target tier and see if this increases that tier’s overall share. If it does (which is often the case) you can then increase the price in your target tier. This kind of two-step pricing where you reframe the highest tier, check for changes in tier share, and then increase the target tier, and check again for changes in tier share, is one of the fundamentals of price testing.

Packaging

Of course, there are other ways to guide users into the target tier. You can experiment with different packaging. It is often easier to change packaging than it is to change subscription pricing. To test packaging, it needs to be easy to switch different functions on and off and to know which functions are of value to which kind of user.

As was the case above, you are trying to lead customers into the tier that is best for them, while optimizing the offer for your target tier. Hubspot has done a good job with this as well. On their pricing page, you can see the differences in packages, from Free to Starter to Enterprise. Look at all of the packaging options they have to test. Over time, you will want to be able to easily test different packages and overall impact on demand and distribution across tiers. As with A/B testing of language in search ads, small changes can have surprisingly large results.

Transactional metrics

These days more and more companies are adding a transactional component to their pricing. A well-chosen transactional metric connects closely to value. In Hubspot’s case, the transactional metric is the number of contacts. It is generally much easier to price test transactional metrics than it is subscriptions. You can test different metrics, different bundles and different price levels without annoying or confusing the market, who are generally paying closer attention to subscription prices. Optimizing transactional pricing is easier than optimizing subscription pricing and can have a big payback.

Value messages

Finally, it is important to constantly test your value messages. The simplest thing is to A/B test different messages for each tier and see how different sets of messages work together to optimize demand across tiers.

This is not enough though. The order in which messages appear can be as important as the messages themselves, and this can be different for different buyers. We were once pricing a solution that was bought by the head of nursing at some hospitals and by the Chief Financial Officer (CFO) at others. It was important to present the emotional value drivers around healthcare worker safety before presenting any economic value drivers. For the CFO the reverse was true, they cared about worker safety, but they needed to understand the economics first. Testing paths is as important as testing the specific messages.

Conclusion

Testing plays an important role in pricing, but it requires a lot of structure and preparation to be successful. A quick review:

  1. Begin by testing your economic and emotional value propositions and how they play in different market segments. Use this to refine your segmentation and customer targeting.
  2. If you are using a tiered architecture, make sure you understand the intended role of each tier and test that it is actually performing that role.
  3. Adjust packaging to guide buyers into the target tier.
  4. Take advantage of framing effects, which means you need to look at the impact of a price level on adjacent tiers.
  5. Create a transactional component for your pricing and use this to get a deeper understanding of market dynamics.

At Ibbaka we are conducting a survey on pricing and innovation. It would be great to have your insights into this. Without good pricing strategies, the best innovations can fail!

The post How to Effectively Test Your Pricing appeared first on OpenView Labs.

Source: Openview