U.S. Companies Severely Mismanaging New Business Opportunities, CMO Council/BPM Forum Survey Finds

Marketing and C-Level Executives Are Dissatisfied With the Way They Generate New Business Yet More Than Half Lack Formal Process to Correct the Problem

U.S. companies may be suffering huge losses in revenue due to mismanagement of new business development activities, according to an online survey fielded by two leading executive organizations. Many of the corporate officers polled believe revenues at their companies could increase by more than 20 percent through the adoption of improved prospect harvesting practices.
Entitled "Gauging the Cost of What's Lost," the study suggests that while companies may be good at generating large volumes of business leads, most prospects languish because sales is too frequently focused on only closing the most promising and qualified short-term opportunities. According to business acquisition experts, an estimated 80 percent of leads are typically lost, ignored or discarded, compromising top-line revenue growth. Some 73 percent of respondents in this survey say their company has no process for re-qualifying and revisiting business leads.
The study is based on a third-quarter, 2004 online survey of nearly 800 respondents in which CEOs, CFOs, COOs and Division or Group Executives represent 47 percent of the respondents, while nearly 20 percent represent CMOs and Senior VPs or VPs of Sales. Approximately 13 percent of the respondents represent companies with more than $250 million in annualized revenue. The study was fielded by the Chief Marketing Officer (CMO) Council, whose members include more than 1,000 top decision makers at high-technology companies, and the Business Performance Management (BPM) Forum, an elite group of 500 senior managers dedicated to furthering operational visibility and financial accountability at global corporations. The survey was underwritten by Wendover Consulting, a leading provider of Opportunity Recovery Services outsourced by leading BtoB marketers.
In "Gauging the Cost of What's Lost," nine out of ten survey participants said new customer acquisition is important to business growth. Yet, approximately 44 percent of all respondents are unsatisfied with the way their companies go after new business. Nearly three-quarters of respondents believe they could increase revenue at least 10 percent with better business development practices; 37 percent say they could increase the top line by more than 20 percent.
Also among the survey findings:

--  While 53% of respondents believe the sales and marketing functions
    have a close and collaborative relationship, only 7% feel the two groups
    work together very effectively to harvest business prospects.
--  56% of the respondents don't have a formal process for generating,
    qualifying, certifying and validating new business opportunities.
--  56% of respondents convert less than 10% of their business prospects
    into deals; approximately 30% covert less than 5%.
--  Most respondents are not satisfied with their conversion rates; only
    5% are very satisfied.
--  Nearly half of the respondents say it takes at least six months to
    close a deal.
    

"New business acquisition and conversion is challenged in today's commercial enterprise, and the problem is significantly impacting top-line performance," said Donovan Neale-May, Executive Director of the CMO Council and founder of the BPM Forum. "Marketing today is utilizing new digital channels of interaction to gain customer access and response, but current qualification and filtering systems are unable to handle the influx of leads. Companies have to devote much more attention to how they target, capture, qualify, manage and track pipeline opportunities within their organizations."
"It's time companies take a hard look at the revenue they're leaving on the table because they lack the infrastructure, disciplines and budget necessary to effectively monetize new business inquiries and opportunities," added Larry Dillon, Chief Executive Officer of Wendover Consulting. "Marketing is focused on creating new business leads; sales is focused on closing the most promising of those leads. It's my belief that a new and separate function is now required to extract unrealized revenue growth from marginalized, overlooked and neglected business opportunities."

To undertake the research, the CMO Council and the BPM Forum joined forces with BusinessWeek Research Services and Sales and Marketing Strategies & News magazine. As the online survey was conducted, it was accompanied by one-on-one interviews with senior marketing executives at several major companies.