Quadrant Analysis for B2Bs – Cash Cows Produce Best Marketing ROI

During the heyday of conglomerates in the 1960s, the Boston Consulting Group (BCG) developed its growth-share matrix model, which has since been widely used by strategic planning and corporate development teams across America.  It was a simple model that showed a corporation how to allocate its cash across various business units.  There were stars that had a relatively high market share in a high growth rate market, cash cows with a relatively high market share in a low growth rate market, question marks that had a relatively low market share in a high growth rate market, and dogs with a relatively low market share in a low growth rate market.

Since the Marketing Id encourages unconventional thinking, I thought it would be a great idea to apply an old BCG-style quadrant concept to analyze the optimal tradeoff between inbound and outbound marketing in today’s B2B environment.  However, I am not going to do this from BCG’s growth-share perspective, but simply use their quadrant analogies from a relative use standpoint. Accordingly in the figure below, I present my revised BCG-style model showing inbound marketing (IM) usage from low to high along the x-axis and outbound marketing (OM) as the dependent variable from low to high along the y-axis.

So in my BCG-style model for IM-OM, I came up with the following revised classifications of B2Bs that are managing a mix of IM and OM elements in their integrated marketing efforts or plans:

  • Cash cows are B2Bs with high IM activity that is driving low OM activity. These B2Bs have been the early adopters of IM and have matured in its use to the extent that IM drives what they believe to be an optimal amount of OM activity.  These B2B cash cows are now consistently generating substantial leads using relatively less expensive IM techniques over more expensive OM methods. These B2B cash cows are already “milking” their previous investments in an integrated demand generation IT infrastructure and spending much less on OM activity as required.  Thus, B2B cash cows produce the best marketing ROI amongst their peers.
  • Dogs are B2Bs with both, low IM and OM activity.  These B2Bs are typically not marketing-driven and have minimal marketing budgets to manage their brand equity and market share.  However, unlike their counterparts in BCG growth-share scenarios that recommend dogs be sold off, dogs are actually pets in my low IM-low OM world that can be redeemed by gradually increasing their low-cost IM activity.  In my BCG-style model for IM-OM, at least some of these dogs, usually engineering-heavy B2Bs, can become cash cows that shun a heavy and expensive OM route.
  • Question marks are traditional B2Bs that have grown in the era of OM and have only recently started dabbling in IM. Question marks spend large amounts of their marketing budget on relatively expensive OM activities. Thus, question marks have among the lowest marketing ROI for B2Bs.  A question mark has therefore little choice but to dramatically increase its IM and become a star, before it starts reducing its OM activity to turn into a more respectable ROI cash cow.
  • Stars are B2Bs with both, high IM and OM activity. Many stars have migrated to this position from question mark status and hence IM has not been their driver.  But IM needs to become the driver of these stars, if they want to develop into the next cash cows, where they will reduce their reliance on expensive OM methods and increase their marketing ROI.

In summary, from an integrated marketing plan perspective, my BCG-style model for IM-OM concludes that:

  • A cash cow is the optimal position for a B2B, since it delivers the best marketing ROI.
  • A star is not all that it is cracked up to be for a B2B, since showy, disruptive and expensive outbound activity does not  deliver the desired marketing ROI.
  • A dog can be redeemed as a marketing-driven B2B, if it gets in tune with marketing, specifically for inbound activity.
  • A question mark, being a traditional B2B with a high OM-low ROI structure, needs to do a two-step towards becoming a more optimal ROI cash cow.
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About Jack Nargundkar

High-tech marketing is always a constant compromise between logical left-brain analytics and creative right-brain activities. Jack has been living this struggle his entire working career, which he began as a software geek after graduating with a BSEE degree from Bombay University. To hone his marketing skills, Jack went on to pursue an MBA degree from Columbia Business School in New York City. Jack has since gained wide-ranging marketing experience from working at start-ups to Fortune 500 companies in the global IT, Defense & Space, and Telecommunications industries. In the past few years, Jack has focused on developing integrated marketing strategies and plans that incorporate a judicious mix of inbound and outbound marketing techniques. In addition to being a self-published author, Jack has been recognized for outstanding analytical and communications skills, authoring technical articles (self and ghosted) in numerous trade publications and editorial opinions in Business Week, The Wall Street Journal, The Washington Post, and The New York Times.
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