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Buyer's Guide

What Is the Cost of Ineffective Customer Communications?


Over 5% of your company’s annual revenue – that’s the cost burden you incur for ineffective customer comminations.

Proof that most of your customer communications (marketing content and sales conversations) are probably ineffective can be seen in over a decade of 3rd party market research, which is summarized into the following Customer Communications Index:

  • Less than 50% of your marketing and sales communications are relevant to your customers
  • Less than 30% of your marketing content is relevant to your customer-facing teams

Just for a moment, consider these data points and the cost burden they place on your P&L. Even if your organization is better than the average, the cost is still too high, and avoidable.

Use the following analysis points to help quantify your true cost:

Marketing and Sales Costs

  1. Cost to create and distribute ineffective marketing content. Marketing content includes collateral, demand-generation campaigns, sales tools, and sales support training provided by Marketing. Survey your customers and ask them what percentage of the marketing content was useful in helping them with their buying decision. Survey your sales team and ask them what percentage of the marketing content is useful in helping them create and win opportunities. Multiply the blended percentage that was not useful by the total dollars spent to create the content, including full-load salaries of employees, and external vendors such as agencies and media buys.
  2. Cost of content created by Sales (Direct/Indirect). Survey your sales team and ask them what percentage of their time they spend recreating/creating messaging/content because they do not have what they need. Multiply the percentage of time spent creating content by the sales team’s full-load salaries. What incremental revenue could be generated if 50% of this content creation time was instead spent with customers?

Lost Revenue Cost

  1. Deals lost to competitors. In the last 12 months, what percentage of the qualified opportunities was lost to competitors? What is the total amount of lost revenue?
  2. Discounts to win/retain accounts. In the last 12 months, what was the total dollar amount of the lost revenue “given” or discounted to close and/or keep the business?
  3. Deals lost to “no decision.” In the last 12 months, what percentage of the qualified opportunities was lost to the “do-nothing decision,” meaning the prospect elected to stay with the status quo? What is the total amount of revenue lost?
  4. Underperforming new-product launches. In the last 3 years, what percentage of the new-product launches missed first full-year projections by 25% or more? What was the total dollar amount of the lost revenue?

You probably don’t even need to calculate and total these numbers to know that the cost burden on your P&L is too high.

Depending on the effectiveness of your messaging and the quality of the implementation into content and conversations, you can reduce these costs by 10 to 20%.

For example, when Agilent Technologies targeted “deals lost to the competition,” here is what they accomplished:

“Our win rate increased by 30% and the time we spend supporting the field was reduced by around 50%, for the product family I support.”
Nigel Mott, Product Sales Manager
Agilent Technologies

Typically, you can reduce these cost burdens for less than 10% of your total costs and use the other 90% to improve margins and profits. And, you can easily run a small test pilot to validate your projected cost savings.

Want help benchmarking your customer communications, doing a cost analysis, or running a pilot program? We are here to help you. Contact Us Now.


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