Monday, November 12, 2018
The stereotypical image we have of B2B buying is that it involves expensive and/or complex products or services, large buying groups, and long buying cycles. But in reality, many B2B companies derive substantial revenue and profit from other types of sales. That's why defining relevant buying scenarios should be an integral part of your go-to-market planning.
Most of the B2B demand generation research and other literature that's been published over the past few years has focused on "high consideration" purchases that involve multiple decision makers, complex decision-making processes, and long buying cycles.
For example, in the 2018 B2B Buyers Survey by Demand Gen Report, 79% of the respondents said that between one and six people are involved in their purchase process, and another 13% said that the process involves between seven and nine people. Sixty-one percent of the respondents said that the length of their buying cycle had increased compared with a year earlier. And during the recent Gartner Sales and Marketing Conference, CEB said that the average size of the B2B buying group had increased to 6.8 people, up from 5.4 people in its earlier research.
But high consideration purchases with large buying groups and long buying cycles have never represented all B2B buying. In fact, many B2B purchases are fairly routine, where the buying decision is made quickly by a small group of people, or even by a single individual. In a 2018 survey of 114 "industrial buyers" by Thomas, 56% of the respondents said they make buying decisions in less than one month, and another 29% said their typical buying process is between one and three months.
While we don't have much recent data regarding the distribution of B2B purchases across various types of buying situations, it's likely that substantial dollars are associated with buying scenarios other than the high consideration stereotype.
In an important survey of more than 3,000 B2B buyers conducted in 2009 by Enquiro and discussed by Gord Hotchkiss in The Buyersphere Project, survey respondents estimated that 50% of their budget was spent on "Repeat" purchases. In this research, Repeat purchases were defined as low risk purchases that are made frequently and involve only minimal changes from purchase to purchase.
The important point here is that most B2B companies derive at least some revenue from multiple types of purchases, and many companies derive significant revenue from more than one buying scenario. It's equally important to recognize that different buying scenarios require different go-to-market and demand generation strategies to achieve maximum success. Therefore, defining relevant buying scenarios and mapping revenue to those scenarios should be an integral part of your go-to-market planning.
What is a Buying Scenario?
A buying scenario is a description of a buying process that includes two major components - the functional attributes of the process itself, and the factors that describe the context of the decision-making process. The diagram at the beginning of this post depicts the buying scenario model that I've been using for several years:
The functional attributes of the buying process are shown on the right side of the diagram. These attributes include the size and composition of the buying group, and the length of the buying cycle. One attribute that often receives too little attention is what I call "Relative influence of individual buying group members." It's not that uncommon to identify a buying scenario in which the "official" buying group includes three or four people, but the buying decision is actually driven by one member of the group.
The items on the left side of the diagram describe the context in which a buying process is conducted. The common denominator across all these factors is that they are designed to capture the level of risk that buyers associate with a purchase decision. As the level of perceived risk increases, most buyers take steps to mitigate the risk, and those steps largely dictate the functional attributes of the buying process that's used. So for example, the buying process used for an expensive product or service, or for a purchase that will require a significant amount of change in the buyer's organization will usually involve more decision makers, include more research activities, and take longer to finish.
Buying scenarios can vary in significant ways, and those variations call for different go-to-market strategies and different demand generation tactics. Therefore, it's important for marketing and sales leaders to identify the buying scenarios their company is encountering, and use that information to craft appropriate demand generation programs.
Sunday, November 4, 2018
Demand Gen Report's 2018 Marketing Measurement and Attribution Benchmark Survey makes one point abundantly clear: Measuring marketing performance is both a top priority and an ongoing challenge for most B2B marketers. Eighty-seven percent of the respondents said that measuring marketing performance is a growing priority for their company, but more than half (54%) also said their ability to measure and analyze marketing performance "needs improvement" or is "poor/inadequate."
The Demand Gen research also revealed that the two most widely-shared motivations for improving measurement capabilities are:
- The desire to show marketing's impact on pipeline and revenue (70% of survey respondents)
- The push to show ROI from all marketing investments (67%)
Both of these objectives require the use of financial metrics, and for years, the gold standard for measuring the financial performance of marketing has been return on investment (ROI). However, measuring the ROI of marketing accurately can be quite challenging.The heart of the challenge is attribution, which is the process of assigning both revenue and costs to marketing programs. It's simply not possible to calculate marketing ROI accurately unless you can accurately attribute revenue and costs.
Assigning costs to marketing activities and programs isn't always easy, but it can be done accurately using principles of activity-based costing. Revenue attribution is more difficult to do accurately because of the number of variables that must be considered and the volume of data that's required.
The two most robust methods for attributing revenue to marketing and advertising programs are marketing mix modeling (MMM) and multi-touch attribution (MTA).
Marketing Mix Modeling
Marketing mix modeling involves the application of advanced statistical techniques to estimate the impact of marketing and advertising programs on incremental sales. Marketing mix models are based on several months of historical data about sales and about marketing/advertising spending across both digital and offline channels. The models also typically incorporate factors such as weather, competitive activity, seasonality, and economic conditions.
MMM is a "top-down" approach. These models do not evaluate the actions of individual prospects or customers. Because MMM is backward-looking and doesn't consider the behavior of individual prospects and customers, it doesn't provide the timeliness or level of granularity that is required to support tactical marketing decisions.
Unlike marketing mix modeling, MTA is a "bottom-up" approach that involves the analysis of data about the behaviors of individual prospects and customers. Most MTA solutions focus on digital marketing activities, and therefore they may overstate the revenue impact of online marketing programs. MTA solutions can also produce inaccurate estimates of revenue impact because they don't usually account for a baseline of revenue that would exist without any marketing efforts.
Most robust MTA solutions use advanced statistical techniques and computer algorithms to attribute revenue to marketing activities rather than relying on simplistic, pre-set rules that often produce wildly inaccurate results.
The Best of Both?
Because of the inherent limitations of MMM and MTA, the current state-of-the-art is to use a combination of both methods. But this can raise a significant cost issue. Gartner has recently estimated that companies pay between $100,000 and $250,000 on average per year for an MMM or MTA solution. And the costs can be much higher. Therefore, these solutions will be beyond the reach of many small and mid-size B2B companies.
What to Do? Measure Influence and Impact, not ROI
The marketing measurement space is evolving rapidly, and we may soon have revenue attribution tools that produce more accurate results, and are less complex to use and less costly to acquire. But, what should B2B marketing leaders do in the meantime?
The obvious solution is to use an approach to measurement that avoids or minimizes the need for revenue attribution, while preserving the ability to make sound decisions about the marketing mix and construct a persuasive business case for the value of marketing.
The key is to use a measurement system that captures the influence and/or impact of marketing programs on important business outcomes. In a future post, I'll describe the process for building this kind of measurement model, but here are the four basic steps:
- Identify strategic business outcomes
- Identify key outcome drivers
- Link marketing programs to outcome drivers
- Measure program influence/impact on outcome drivers
This methodology will not result in an ROI calculation for individual marketing programs, but given the inherent challenges of revenue attribution, the accuracy of most marketing ROI calculations is questionable at best. This approach will enable marketing leaders to understand the impact of their activities and programs and build a compelling business case for the value of marketing to the business.
Illustration courtesy of Kari Bluff via Flickr CC.
Sunday, October 28, 2018
Earlier this month, the Content Marketing Institute and MarketingProfs published the findings of their latest B2B content marketing survey. The B2B Content Marketing 2019: Benchmarks, Budgets, and Trends-North America report presents findings from 771 North American respondents who indicated their company primarily sells to other businesses.
CMI and MarketingProfs made a fairly significant change to their methodology for this survey. This year, they qualified respondents based on whether their company has been using content marketing for at least one year, and whether they are (a) a content marketer, (b) someone who is involved with the content marketing function, and/or (c) someone to whom the content marketing function reports. The qualified respondents represented a wide range of industries and company sizes.
For the past several years, the CMI/MarketingProfs survey report has highlighted important differences between "most successful" and "least successful" content marketers. In the latest survey, the "most successful" marketers include respondents who characterized their company's overall content marketing approach as extremely or very successful, while the "least successful" marketers are those who rated their company's content marketing effort as minimally or not at all successful.
The following table shows some of the important differences between the most successful and least successful content marketers identified in the new survey:
Most of the differences shown in this table have also been seen in earlier versions of the survey. For example, the importance of having a documented content strategy was first identified in the 2014 edition of the survey. So, most of these findings are not particularly surprising.
One of the more interesting findings in the latest survey deals with buyer trust. Ninety-six percent of the most successful marketers agreed that their customers and prospects view their organization as "a credible and trusted resource." Even more surprising, about three out of four (74%) of the least successful marketers also agreed with that statement.
Other recent research has painted a different picture regarding buyer trust. For example, the 2018 B2B Buying Disconnect study by TrustRadius was a survey of 488 individuals who had played a significant role in a business technology purchase within the preceding year. In this research, survey participants were asked to select which sources of information they use during their purchasing process from a list of 15 options.
TrustRadius also asked survey participants to rate the trustworthiness of each information source, and the five least trustworthy sources identified by respondents were:
- Vendor marketing collateral
- Vendor blog
- Vendor-produced case studies
- Vendor/product website
- Vendor representative
It's difficult to reconcile these findings with those in the CMI/MarketingProfs survey. It's possible, of course, that the business technology buyers surveyed by TrustRadius are simply more skeptical about vendor information than other B2B buyers.
It seems more likely, however, that the marketers responding to the CMI/MarketingProfs survey have an overly optimistic opinion about the level of trust they've earned from prospects and customers. Several other recent studies have shown that business buyers tend to view vendor-provided content with a considerable amount of skepticism.
One possible explanation for this apparent disconnect between content marketers and business buyers may relate to how marketers learn about the needs and perceptions of their prospects and customers. When the marketers surveyed by CMI and MarketingProfs were asked what techniques they use to research their audience, the top three methods identified were:
- Sales team feedback (74% of respondents)
- Website analytics (73%)
- Keyword research (65%)
Only half of the respondents said they use primary research to learn about their target audience, and even fewer (42%) reported using customer conversations or panels. While sales team feedback, website analytics, and keyword research can all produce valuable data for marketers, those techniques won't consistently provide reliable insights about buyer trust.
Trustworthy and credible content is now essential for marketing success. Therefore, it's imperative for marketers to get a regular, objective assessment of the level of trust their content is earning from prospects and customers.
Top image source: Content Marketing Institute and MarketingProfs
Sunday, October 21, 2018
Most marketing leaders agree that the role of marketing has grown significantly over the past few years. Much of the recent conversation about the expanding scope of responsibility has focused on marketing's role in managing customer experiences and driving business growth.
Numerous research studies have shown that marketers believe they are (or soon will be) responsible for designing and managing customer experiences. For example, in a 2014 survey of 478 CMOs and other senior marketing executives by The Economist Intelligence Unit, 75% of the survey respondents said that within three to five years, they would be responsible for the end-to-end customer experience.
Growing revenue has always been a primary objective of marketing, but the pressure on marketing leaders to drive revenue growth is increasing. In a 2016 survey of 535 CEOs and 847 CMOs by Accenture Strategy, 50% of the CEOs said their CMO is primarily responsible for driving disruptive growth in their organization. CMOs were ranked ahead of all other C-level executives, including the CEO, the chief strategy officer, and the chief sales officer.
To win a leading role in customer experience and business growth, marketers will need to step beyond the responsibilities that have traditionally been associated with the marketing function. Two recent research studies provide an interesting perspective on how the scope of marketing has, and has not, expanded.
The CMO Survey
The August 2018 edition of The CMO Survey by Duke University's Fuqua School of Business, the American Marketing Association, and Deloitte provides fairly detailed information regarding the current scope of marketing's responsibilities. This survey generated a total of 324 responses from senior marketing leaders in U.S. companies, 66% of whom were affiliated with B2B companies. The detailed survey report makes it possible to isolate the responses from B2B marketers, and the following discussion is based on those responses.
The CMO Survey asked participants to identify the activities or functions that marketing is primarily responsible for in their company. The following table shows the activities that more than 50% of respondents said marketing is primarily responsible for in their organization.
The table below shows the activities or functions that less than 50% of respondents said marketing is primarily responsible for in their company.
These survey findings suggest that marketing's scope of responsibility has not expanded beyond conventional marketing communications functions in most B2B companies. For example, only 38.6% of respondents from B2B product companies, and 48.1% of respondents from B2B services companies said that marketing is primarily responsible for customer experience. And only 35.1% of respondents from B2B product companies, and 32.7% of respondents from B2B services companies indicated that marketing is primarily responsible for revenue growth.
The survey also shows that marketing is not primarily responsible for the development of market entry strategies, new product development, pricing, or innovation in most B2B companies.
Some participants in The CMO Survey may have interpreted the survey question strictly and based their response on whether marketing has primary responsibility for a given activity. If that's true, it's possible that marketing is involved in some of the activities shown in the second table.
The CMO Council/Deloitte Survey
A 2018 survey by the CMO Council and Deloitte provides a more nuanced view of marketing's scope of responsibility. This survey produced 191 responses from marketing leaders, and appears to include both B2B and B2C marketers. In this research, the survey participants were asked to identify their level of involvement in several areas. The following table shows the percentage of respondents who said they were leading, influencing, or not involved in these areas.
For the past few years, many marketing leaders have argued that marketing is, or soon will be, the principal orchestrator of customer experiences, and that marketing is evolving from "brand storyteller" to "growth driver." These research findings are important because they show that many marketing leaders have more work to do to win a leading role in customer experience and business growth.
The gap is particularly significant when it comes to business growth. Producing sustained revenue growth requires companies to leverage multiple growth drivers, many of which have not been traditionally associated with the marketing function. To successfully lead growth efforts, marketing leaders will need to extend their influence to areas such as market entry strategies, product development, pricing, and innovation.
Top image courtesy of Petr Sejba (www.moneytoplist.com) via Flickr CC.
Sunday, October 14, 2018
By now, many B2B companies are already planning for 2019. and part of that planning will involve establishing revenue growth goals for the coming year. Growing revenues has never been easy, but producing consistent revenue growth has become more challenging because of fundamental changes in the B2B competitive environment.
Today's business buyers have more choices, more bargaining power, and higher expectations than ever. And the growing use of "as-a-service" and other subscription-like business models has elevated the importance of long-term customer relationships, while also making them more fragile. Therefore, there's a growing need to provide outstanding experiences at every touchpoint across the entire customer lifecycle.
To address these challenges, a growing number of companies are retooling their leadership structure and adopting new approaches for managing revenue-generating activities. Some B2B companies - particularly technology companies - have created a new C-level position that is usually called the chief revenue officer (CRO).
The specific duties of the chief revenue officer and the scope of his or her authority vary across companies, but the CRO is usually tasked with managing the company's revenue-related business functions, including marketing, sales/business development, direct outside sales, channel management, and customer success/customer service.
A similar approach has been adopted by many B2C companies. Last year, for example, Coca-Cola made news when it chose not to replace its retiring chief marketing officer. Instead, the company created a chief growth officer (CGO) position to manage its marketing, customer, and commerce teams. Culture App, an employee engagement and analytics software firm, recently reported that 455 U.S. companies have chief growth officers, and that number may be higher now.
These organizational moves have been driven by the recognition that the dynamics of revenue growth have changed in fundamental ways. For most B2B companies, the business case for implementing a chief revenue officer or chief growth officer role has become compelling for two reasons.
Growth Originates from Multiple Sources
To optimize revenue growth, business leaders must first identify how growth happens, or more accurately, where it originates. There are several distinct sources or wellsprings of growth. These "structural" sources of growth are not dependent on the way a company is organized or on the types of products or services it sells. Instead, they are based on the strategies and tactics a company can use to exploit each source.
The following diagram shows the four most common structural sources of revenue growth. These sources are always present, and they exist independently of the market conditions facing a company. However, the volume of growth that any particular company can extract from each source is greatly influenced by the company's market and competitive environment.
As a practical matter, no single source is likely to produce enough growth to enable a company to reach its overall growth objective. Therefore, to maximize overall revenue growth, most companies will need to tap all four structural sources of growth.
Growth Demands Cross-Functional Teamwork
Successful revenue growth requires the active participation of multiple business functions, particularly given the need to leverage multiple sources of growth. The following table shows that three or four distinct business functions must be involved to maximize the potential of the four structural sources of growth. And this table is an oversimplification of reality for some companies. For example, companies that derive significant revenue from online sales and/or sales by channel partners would need to add e-commerce operations and/or channel management to the business functions shown in the table.
Successful revenue growth also requires the activities of these business functions to be tightly coordinated, which means that they must work collaboratively on an ongoing basis.
In most B2B companies, the revenue generation process has traditionally involved a series of "hand-offs" from one business function to another. The metaphor often used is a relay race in which each member of the relay team runs for a specified distance and then passes the baton to the next runner.
It's now clear that the relay race approach is no longer an effective way to manage revenue-generating activities. To optimize revenue generation, customer-facing functions must act more like a basketball team than a 4 X 100 meter relay team. All team members are involved throughout the entire game, and their roles change based on the situation.
Enter the CRO/CGO
These circumstances provide a powerful argument for creating a chief revenue officer or chief growth officer role to manage and coordinate all revenue-generating activities. Long ago, the architect Louis Sullivan argued that the shape of a building should be based on its intended use, that "form ever follows function." The same principle applies to business organizations.
Placing all revenue-generating activities under the leadership of a chief revenue officer or chief growth officer enables a company to make the "shape" of its organization reflect the realities of today's revenue generation environment, and constitutes an important step toward optimizing revenue growth.
Top image courtesy of ccpixs.com (Creative Commons License).
Sunday, October 7, 2018
There's no longer any doubt that thought leadership content is having a major impact on B2B buying decisions. Research studies have confirmed that business buyers are consuming more thought leadership content, and that it affects decisions at every stage of the buying process. Research also shows, however, that business decision makers have become more selective about the thought leadership content they will give their attention to.
Today, thought leadership has become a classic double-edged sword. When it's done well, thought leadership has major positive impact on business buyers. Poor thought leadership, on the other hand, can actually be detrimental. In a recent survey by Edelman and LinkedIn, about a third of C-level respondents said that a company's poor thought leadership content had led them not to do business with the company.
The explosive proliferation of content has made it difficult for marketers to develop content that will cut through the noise. Thought leadership content has the potential to do just that, but only if the content constitutes true thought leadership. Therefore, thought leadership is now of those things that marketers really need to "get right" in 2019.
Unfortunately, the term "thought leadership" is now used so loosely that it's no longer clear to some marketers what real thought leadership is. We do know what business decision makers are looking for in thought leadership content. In a survey by The Economist Group, business executives described compelling thought leadership content as innovative, big picture, transformative, and credible.
The problem is, these adjectives don't identify the specific attributes that make content true thought leadership. And the same can be said for many of the other terms we use to describe content. For example:
- All real thought leadership content is relevant and insightful, but not all content that is relevant and insightful qualifies as real thought leadership.
- All real thought leadership content is useful and valuable, but not all content that is useful and valuable qualifies and real thought leadership.
There are two attributes that define true thought leadership and distinguish it from other types of marketing content. When used together, these two attributes provide and effective guide for developing thought leadership content that will cut through the content noise and earn the attention and interest of potential buyers.
Thought Leadership Content is Novel
Real thought leadership content provides information and insights that are genuinely novel. Merriam-Webster defines novel as "new and not resembling something formerly known or used." Therefore, to qualify as thought leadership, content must provide information or insight that adds something new and meaningful to the body of knowledge about a topic. Content that discusses established principles or information can be useful and valuable, but it doesn't constitute true thought leadership.
Thought Leadership Content is Research-Based
Research plays two distinct roles in the development of thought leadership content. First, original research is usually required to capture or develop the new information that makes thought leadership content novel. For example, surveys are often used to capture data that provides the foundation for thought leadership content.
Original research is also critical for thought leadership content because it provides the evidence that makes the content authoritative and persuasive. It's important, of course, for all types of content to be credible, but thought leadership content must meet a higher standard. Because thought leadership content advocates new and novel ideas, it's essential for content developers to support those ideas with sound and thorough research.
Thought Leadership and Third-Party Content
Some B2B companies - particularly technology companies - regularly use content produced by third-party experts in their content marketing program. This often includes content produced by analyst and consulting firms, and by research organizations. Third-party expert content can be a valuable part of your content marketing program because business decision makers tend to view such content as credible. In fact, I've been advocating the use of third-party expert content for more than four years.
It's important to recognize, however, that distributing thought leadership developed by others will not cause your company to be perceived as a thought leader. To earn thought leader status, you will need to create your own thought leadership content. This doesn't mean that you can't work with external research firms and/or content developers to produce thought leadership content. In fact, working with an experienced researcher and/or content developer is the right approach if your company doesn't have internal expertise in these areas. But the finished content should be published under your company's brand.
Image courtesy of Affen Ajlfe (www.modup.net) via Flickr CC.
Sunday, September 30, 2018
Earlier this year, Scott Brinker unveiled the latest version of his now famous marketing technology landscape supergraphic. To no one's surprise, the new graphic showed that the number of marketing technology solutions has continued to grow at a rapid pace.
The 2018 landscape includes 6,829 technology solutions, up 27% from the number in the 2017 version of the graphic. That's a healthy year-over-year growth rate, but the expansion of the marketing technology space is even more dramatic when you consider the growth that's occurred over the past few years. As Scott recently wrote, ". . . the size of the 2018 landscape is equivalent to all of the marketing tech landscapes we assembled from 2011 through 2016 added together."
So how are marketers dealing with this explosion of technologies? The State of Marketing Technology 2018 study by Walker Sands Communications (in partnership with Scott Brinker) provides several interesting insights about this issue. This study consisted of a survey of 300 marketing professionals that was fielded in the first quarter of this year. While this research didn't focus exclusively on B2B, many of the study findings will reflect the views and behaviors of B2B marketers.
Here are some of the important findings from the 2018 survey:
- Seventy-five percent of the survey respondents said they add new tools to their marketing technology stack at least once a year, and almost half (48%) said they add new tools at least every six months.
- Seventy-six percent of the respondents said they perform a holistic assessment of their marketing technology stack at least once a year, and over half (52%) said they assess their technology stack at least every six months.
- Thirty-seven percent of the respondents said their company's use of marketing technology has grown steadily over the past three years, and another 20% said it has evolved rapidly.
- Sixty-one percent of the respondents described their company's ability to add new solutions to their marketing technology stack as somewhat (46%) or very (15%) agile.
Walker Sands has conducted this study annually for three years, and some of the questions have appeared in all three surveys. So it's possible to see how the attitudes of survey participants have evolved.
For example, all three surveys asked participants whether their company was investing the right amount in marketing technology, and whether the technology tools in place at their company were up to date and sufficient to help them do their job effectively. The following table shows the responses for 2016, 2017, and 2018:
As the table shows, there was a big uptick in the positive attitudes on these two points in 2017, followed by modest declines in 2018. These declines likely occurred because more marketers have become deeply aware of the critical role that technology plays in marketing. Therefore, they are more sensitive to any perceived shortcomings in their company's technology toolset.
The Walker Sands survey report argues that many companies are failing to keep pace with the evolution of marketing technologies. That's probably true, but I don't believe that a short lag in adoption is necessarily a major problem for most companies.
As I have previously written, marketers need to use a "systems" mindset when evaluating new marketing technologies. They need to determine if a new tool will complement and enhance the overall performance of their existing technology stack. This type of assessment takes a little time, so some lag in adoption is almost inevitable. Marketers just need to be sure they aren't falling too far behind the curve.
Top image courtesy of Grempz via Flickr CC.