Hybrid Channels Spark Marketing WinsWhat do football's Bill Belichick and baseball's Joe Torre have in common? Besides a boatload of championships, these coaches strive for day-to-day team excellence by expertly analyzing and adjusting their lineups - achieving the optimal mix for any on-field situation. Getting the mix right doesn't just apply to sports.
Not long ago, IBM's marketers evaluated the mix of channels that drove leads through www.ibm.com, the site responsible for generating one-third of its sales leads. Despite that statistic, the marketers thought that the Web site's efficiency and overall yield could be improved. IBM set out to analyze, readjust and optimize its output.
The results? One pilot program generated 400 percent improvement in demand generation versus the control group and historical performance data. A similarly crafted pilot saw a 200 percent rise in Web hits and a 500 percent increase in leads for follow-up. Overall, the site often can achieve conversion rates of 5 percent, dwarfing the industry average of 1 percent to 2 percent.
This was accomplished by a "hybrid" channel strategy: that is, linking two or more channels, such as the Internet, telesales, direct and field sales, to drive leads and sales in the best possible ways. In this case, the careful melding of telesales efforts with those of ibm.com helped build the site into a finely tuned lead generation machine. The ibm.com numbers illustrate that hybrid channel models deliver results that move the revenue needle and affect stock prices. A hybrid mix of channels working well can reduce selling costs 20 percent to 30 percent and may even cut them in half.
With marketers pressured to increase efficiencies and drive optimal results, those positive outcomes offer a career life preserver. An analytical outlook, combined with a robust marketing measurement model, is bound to improve business results and yield real numbers to parade in the boardroom as proof of marketing's success.
A leading global communications company decided to analyze its go-to-market strategy. Needing to fill its sales and marketing funnel with more qualified leads, yet reduce costs, the company last year unveiled a tele-Web hybrid strategy that harnesses customers into the sales pipeline and nurtures them toward a buy. The number of leads in the pipeline doubled, telesales and sales staff account revenue increased up to 25 percent and, because of the efficiency of the channel, the sales staff has more time to cover important existing accounts.
Developing hybrid models is complex, and key questions should be raised during planning: Should each channel be required to produce end-to-end sales, or should certain channels provide only a component of the sales process? Should multiple channels overlap and potentially compete for the same customers, or should each be assigned its own unique product/market? Sound hybrid models are based on five principles:
Customers choose channels. Too often both marketing and sales executives do a "land grab" to define the specific customers and markets they want to "own." However, customers may not buy the way you want to sell. You must provide channel choice to serve the market. If your largest account wants to buy through the Web or a distributor as opposed to your field sales rep, what are you going to do, say no?
Customers will channel surf. "Channel surfing" is associated with buyers seeking the lowest price. In reality, customers tend to learn, compare, buy and access service in different channels. Interactive marketing technology and professional telesales centers are rapidly shifting the "learn," "compare" and "service" stages of the customer-buying process away from field-based sales resources.
Align channels, set targets by pipeline stage. The best companies recognize that customers will use different channels at each stage of their sales pipeline, so they operationalize their hybrid models by assigning, say, the lead generation task and a specific lead generation quota to the Web and tele channels while giving the sales task and revenue quota to the field sales team.
Channel conflict must be managed, not eliminated. If you have no channel conflict, you probably aren't covering the market adequately. Channel conflict around coverage and crediting needs to be managed but can't be eliminated.
Transaction economics rule. Small transactions require low-cost, high-volume channels to be profitable. That's why Dell can compete in the small business and home markets: It has world-class DM, online and telesales channels. Conversely, larger transactions need the value-added and selling skills of experienced field sales reps, and the margins on large deals allow for strong field sales investment and compensation plans.
It's one thing to identify a few channels to serve a market; it's another to figure out how to use those channels together to achieve true performance-driven marketing.