With over 20 years of experience in the B2B space, Carlos Hidalgo is a respected thought-leader, blogger and keynote speaker, and was named a ‘Who’s Who in B-to-B’ by US-based BtoB Magazine. He is currently CEO and principal of Annuitas, a provider of lead management process services, and has worked with organisations such as McAfee, HP, CA Technologies and Microsoft.

We chatted with Hidalgo about his thoughts on lead generation versus demand generation and the challenges facing B2B marketers today.

Marketing: How important to B2B marketing is lead generation?

Carlos Hidalgo: While this may surprise you, I would say that lead generation in B2B is not that important. What is truly important is demand generation. Lead generation is focused on simply generating ‘leads’ into the top of the funnel. I speak with many marketers who talk about lead generation as generating responses – responses are not necessarily leads.

Demand generation focuses on generating perpetual demand and creating a dialogue with the buyer at every stage of their purchase process. The reason this approach is so important is that B2B buyers have more information at their fingertips than ever before. Research shows that up to 50% of the buyer’s purchase path is complete before they ever engage with a vendor. This means that B2B organisations have a limited time to engage their buyer and demonstrate they understand the buyer’s needs and challenges. This is done through a defined demand generation strategy that is driven by buyer insights.

You’ve been doing this for a while now. Do you feel that many B2B marketers still fail to understand the impact of comprehensive lead management programs or include them in their marketing programs?

I do and here’s why: I think too many B2B organisations are still very tactical in nature. Many define their marketing campaigns by these tactics – how many times do marketers speak about a ‘webinar campaign’, a ‘lead-nurturing campaign’ or a ‘top-of-funnel campaign’? These are not campaigns. These are tactical, focused actions that are one and done. Marketers need to understand that the buying process is not a one and done activity, it is a dynamic process.  B2B marketers must adapt to that process and develop programs that engage, nurture and convert their buyers. This requires deep buyer insight, development of relevant content, and marketing and sales working together strategically to address the needs of the buyer.

On that marketing and sales relationship, a recent study on B2B showed that 50% of B2B marketers couldn’t confirm leads were being followed up. Is this a common problem?

It is an all too common problem as that statistic indicates. I would say in my experience that 50% is low. With most of the organisations we work with, starting off the overwhelming majority of these leads are unattended. There are many reasons for this, but one of the biggest is where the focus is for marketers. If the focus is on lead generation – the tactical approach of generating responses – sales will most likely ignore these leads as it forces them into being lead qualifiers and not sellers. Sales staff get paid to close deals, not try to sort through a list of names in hopes of finding a qualified buyer. There needs to be a more-established process that delivers a higher qualified lead to sales.

Should this be a key focus?

There has been a lot of focus on how to align marketing and sales in hopes to address this problem. I would submit that this is the wrong approach as the alignment is not the problem but one of the key symptoms of the problem. The focus should be on developing a demand process which focuses on a perpetual state of demand generation, is buyer-centric and maximises customer lifetime value.

Do you foresee a structural shift in the way marketing and sales departments sit within an organisation?

Most definitely. Many organisations have structured their marketing in a siloed or tactics-driven manner. You have event departments, field marketing – which in most organisations simply serves sales – email marketing teams, web teams, etcetera. This only compounds the problem of not being able to take a buyer-centric approach to marketing and sales.

I see the more progressive organisations beginning to understand that there needs to be some centralisation of these functions with the ability to extend this out to the global organisation. While it sounds contradictory, a centralised yet distributed model which is accomplished by the establishment of a demand generation centre of excellence.

Do all B2B organisations need lead management and marketing automation? Is this the silver bullet?

There is no silver bullet when it comes to B2B marketing. The thinking and hope of marketing automation being the silver bullet is the reason why, according to Sirius Decisions, up to 75% of all those who own automation state that they have not received the full value of it. This is also shown by another Sirius Decisions study that stated only 10% of marketing automation owners deploy it for programs later in the buying cycle.

What needs to happen in B2B organisations is a transformation of their demand process, including their buyer dialogue and content approach, their lead management framework (SM), organisational structure and how they are utilising technology in order to enable the process. Without this approach and understanding that technology is simply an enabler, organisations will stay stuck in tactical ruts.

What impact is big data having on lead generation?

I think the potential is there to have a huge impact in terms of data analytics and predictive analytics, but the truth of the matter is that in the present day it is having very little impact in most B2B organisations. While many organisations have the data, there is a gap in that they are not utilising this data to improve their approach and establish a better dialogue with the buyer, thus improving their results.

We will get there as marketers, but I do not believe we are tapping into big data as effectively as we could.

How do you recommend B2B marketers measure the success of a lead generation program?

Demand generation is about maximising the lifetime value of the customer.  Many marketers are still stuck in measuring impressions, opens and clicks.  While these kind of engagement metrics can provide insight to the marketer, they need to understand the rest of the organisation is looking at contribution to pipeline and revenue. Marketers should be looking to value measurements – return on investment, overall reach to their ideal target buyers, increase in deal velocity, and contribution to sales pipeline.

In essence, marketers need to be thinking like business people and begin to measure the value they are bringing to the organisation as a result of their demand programs.

How do you think B2B marketing will evolve in the next five years? How should people be transforming themselves?

I believe that marketers will continue to become better equipped to do the jobs the business needs them to do – engage buyers and maximise the value of those relationships. To date, over 80% of marketers claim that they have been self-taught. While we can learn a lot while on the job, the lack of marketing training is abysmal especially given the importance of this role. I see that over the next five years there will be an increased focus on the education of marketers and skills development.

I also see more organisations adopting a process-first Approach. As we have discussed, demand process is key to an organisation’s success. Too many companies have jumped to marketing technologies – especially automation – in attempt to improve and have failed. I believe that others will learn from these mistakes and ensure that process, strategy and technology are viewed as essential to an organisation’s revenue growth.

Carlos Hidalgo will be speaking at ADMA Rethink, Australia’s B2B Innovations Summit, in Sydney on 9 April and 11 April in Melbourne. For more details or to register, visit: adma.com.au/attend/upcoming-events/rethink-b2b-2013