Are Your B2B Portfolio Companies Not Performing?

Here's Why Traditional Digital Marketing is Failing SaaS & PaaS Firms

We hear it all the time, SaaS or PaaS companies failing to increase their ARR (Read our article on the Sales Dilemma) and making excuses blaming anything and anyone except themselves. This article will sound harsh, but we both know it to be true - unfortunately, but there is some light at the end of the tunnel and it's called THE SYSTEM, but more on that later.

Before I start, you know the statistics for companies that receive investment; 40% will always fail, 75% fail to reach their own targets, and 95% fail to achieve an ROI for their investors.See Harvard Business Review ?The sob stories have never changed, and CEOs maintain the blame game. But why??

Bear in mind, Ben Horowitz of Andreesen Consulting said not so long ago, a business needs to have an inventor (Marc Andreesen) and an entrepreneur (Ben).? Failure to do so is why so many businesses fail; because the success of the business is placed on the inventor who is expected to take on both roles as well as managing people.? The entrepreneur, however, is never going to be a CMO, not because the CMO has rarely or ever run their own business or even sold direct, but because they do not have the attitude or mentality of an entrepreneur – they’re simply employees! ?

One of the critical elements of acquiring new business, is to be aware of how and why people starting buying and know what state of mind they're in prior to a vendors messaging hitting them.? Because of this failure of marketers to read the lay of the land, the marketing follows a downward spiral.?

Fire the Entire Marketing Team!!!

Reading the heading you must be thinking, “surely he must be joking”.? Nope!? I've been in this field for forty years and can 100% confirm and prove why the failure of B2B new business development is entirely the fault of B2B digital marketers.? So go ahead, fire the entire marketing team and you won’t affect your bottom line – ever!

They have lied, misled and cajoled boards of directors to part with nigh-on 50% of the investment capital (See SaaS Capital)?to play out the instructions of big-tech/MarTech companies who have convinced their little advocates to persuade boardroom peers that all the new shiny new SaaS works.? And it does, for the consumer industry, not for B2Bs!? Studying demand generation, lead generation, ABM, pay-per-click, BDRs and telesales, you will quickly realise the ROI hawked around by marketing automation SaaS companies is based upon the statistics from consumer businesses.

The B2Bs tone of voice is invariably based upon that of the copywriter, who has never sold to anyone in their lives.? SEO is based upon claiming to know a secret algorithm and hoping that Google will index the page, yet Google has millions of other pages to choose from yet the B2B bases their entire future on paid and organic traffic by an organisation that seems to operate in a grey area that no one actually knows what to do and can only speculate.?

Pay-per-click is based upon bidding high enough on an advert that appears at the top of the search page, hoping the text resonates with an identified buyer, before they click on the Demand Generation landing page, basing all the above on a potential buyer filling out a form in order that a BDR can later telephone them for a discovery call and sales appointment.??

And yet 100% of B2B buyers hate filling out forms, want to self-serve, self-educate and remain anonymous, rendering everything above as a comnplete waste of time, effort and money.

Research That Proves the Reality

No one is holding marketers to account and demanding an ROI on every penny they spend.? Consumer businesses do, they’re positively bubbling over about getting 3-to-1 or 5-to-1 on every marketing dollar spent on Google, Facebook or other online platform, but B2Bs try and keep everything as quiet as possible so as not to draw any attention to themselves.

I will say, some CEOs are brave enough to fire the CMOs, which explains the average tenure of between nine to eighteen months.See Forbes CMO Website? But sadly, only to replace them with another CMO and another ‘out-of-this-world’ set of promises and so it continues.

Entire marketing teams have continuously ridiculed salespeople, showing off that they’ve achieved their own meaningless KPIs, whilst blaming salespeople for the business failing, saying they can’t close deals. I've even heard of marketing departments saying they’re not responsible for generating leads any longer and therefore salespeople need to go off and do it themselves.? This really is stepping back thirty years.?

Back then, all marketing did was produce business cards and a brochure once a year.? They eventually took over new business development and failed.? Now they say they’re not responsible.? Ok, so fire them and get your business cards online!

Now you know why recruiters and HR department regularly include the phrase in CMO job descriptions to ‘reduce the tension between sales and marketing’.

B2B Digital Marketing & Automation has never worked!

B2B digital marketing and automation, i.e., Marketo, Hubspot etc.,? has never worked for B2Bs, yet there are very few people who are aware of this fact, simply because they have either chosen to not investigate, or simply they’re getting on with their own jobs and hoping for the best. ??

It is critical B2Bs are aware that the whole demand gen, lead gen, ABM and PPC was, is, designed for consumers. We're not selling jeans, Red Bull, holidays or insurance, yet these are the ROI figures bandied around to encourage B2Bs to buy into marketing automation etc. What business do know it that the business has not benefited from the expenditure on marketing SaaS, there is no ROI, yet most people within the business are unqualified to challenge marketing, until now. This is a clear case of the Emperor's New Clothes!

You are aware of the illustration below; the strategy pyramid.? It is crystal clear businesses embark on change well before a hopeful telesales person thinks they can snag a prospect and get them into the fictional funnel.? B2Bs who intend to invest in high value purchases plan and research well in advance - don't you, and recieving a cold call is simply a persistent inconvenience.

I speak from experience.? I founded three B2B technology startups, I personally sold millions and would not trust any marketer (with a broom), as their understanding was and is always different to that of everyone in sales.? CB Insights published online their research showing 52% of the reasons B2Bs failed were marketing related. https://www.cbinsights.com/research/report/startup-failure-reasons-top/

Selling B2B is not complicated, as I mentioned earlier, it’s simply that CEOs and buyers want to self-serve, self-educate, remain anonymous and work out the ROI before speaking to a salesperson, Gartner’s Snr VP of twenty-five years, Brent Adamson, agrees. ?Read our article about The Decline of B2B Sales!

It is a known fact back in 2014 97% of buyers hated demand generation forms (www.6sense.com), now it’s 100% according to Demandbase. Most B2Bs are still using BDRs to try and telephone their total addressable market (TAM) which is a 300-1 shot of finding someone who might be interested.? That’s just one interested person a week and it still does not guarantee a discovery call!

If you’re familiar with the above business strategy pyramid, you know decisions are made based upon five-year strategies, three-year tactics, and one year execution, split into quarterly and monthly operations.? For a BDR to find a prospect, after the prospect has done their own research and are selecting suppliers and chancing they’re at a discovery stage is utter fiction.

Operate within the Confines of Business Strategy

Now can you see why marketing departments are failing.? Most have failed to read a book or do any research of their own for the past ten years and yet they get their salary each month, so who can blame them?

Marketers have been selling snake oil for centuries, yet virtually every B2B HNWI investor or Family Office has been hoodwinked into parting with large sums of money on the promise of an amazing business plan and a future high ARR-FTE. We both know it never happens and that’s why you won’t find a unicorn in B2B and it’s doubtful you’ll even get your 3x return on your investment, not yet anyway!?

As the marketing promises get more elaborate and the teams more defensive, before you know it, you’re another three years down the road without seeing one iota of difference from when you first invested.

Has this Hit the Nail on the Head?

If this resonates with you, consider this;? The only desire a B2B vendor has, is to communicate with a willing prospect.? That’s it.? Because once they’ve talked and understand each other, a sale may happen. ?If this can be achieved at a minimum cost, with minimum effort, and the ratio of people-to-profitability is high, then you’re on to a winner.

Current average B2B SaaS company is running at ￡90,000 ARR-FTE (from $5m to $50m ARR).? It’s not enough, which explains the constant requests for more investment. ?They’ll never improve because their ratios are a disaster.? It should be and needs to be $180,000 ARR-FTE and in many cases, it can be, but only if they change strategy – and it’s not about money/budget.

A Taster of How its Done

You won’t believe how simple it is, however, it completely challenges the existing status quo and all the guff B2B marketers have been hawking for the past ten years or more, as this is almost set-and-forget for 12-18 months, putting most of the marketing team out of a job: -

1. Make the website open access removing all demand generation forms. Create, merge and edit content to educate prospects.
2. Promote content on multiple social media platforms by creating 300-450 adverts in-house. Post 10-15 adverts every day and repeat every month for as long as required.
3. Email the total addressable market (TAM) database weekly for two months informing them of a new event about to happen.
4. Broadcast a weekly live stream show expressly created for your TAM. Emailing them before and after the show.

That's it.? Between 1% and 15% of a TAM begin their buying journey each week.? This approach contacts an entire TAM at the same time, not one at a time, as BDRs are currently doing.? Your portfolio company can pique the interest of thousands of companies and leapfrog their competition, almost overnight.

The above also reduces marketing expenditure and headcount, in the region of 60%-80%.

Do You Have a Problem Portfolio Company?

In the B2B SaaS space, companies are laying people off because marketers keep applying B2C, consumer strategies and tactics instead of aligning themselves to the same buying behaviour their own companies.? As a sweeping statement, they have been too blind or too lazy to recognise their own behaviour and apply it in their own marketing.? Marketing only had to ask.? The concluding result for B2Bs is that their efforts have finally come to a halt, and no amount of money or replacing people or beating them with a stick will change anything.?

Conclusion

Inexperienced, lazy or arrogant CMOs will attempt to continue with demand generation and pay-per-click, followed up by cold calling via BDRs and even demanding experienced salespeople get back on the phones. No marketing leader is doing anything in the interest of the business, as they continue to only protect their own jobs and each other for as long as possible.

This approach to B2B new business development is a world-first for B2Bs by exploiting technology and logic.? There are users around the world embracing this new approach, referenceable on my LinkedIn profile, company pages, and a daily growing group we manage.? My website and content, naturally, is open access to enable self-service and self-education.

Turning a business around won’t take long, four to six months perhaps.? It will reduce expenditure and massively increase exposure to the exact type of businesses your B2B portfolio companies promised they would sell to in the first place.

This probably sounds too good to be true if all you have heard for the past few years is excuse after excuse for poor performance and failure to hit targets. However, if this has piqued your interest and makes sense to you, then let’s have a chat, it could be the missing piece of the puzzle.?

Nigel Maine

Founder & Director

[email protected]

0800 970 9751 - 07547 187383