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.
Sunday, September 23, 2018
In a recent column published at The Drum, Samuel Scott argued that the marketing industry has split into two distinct camps that have adopted and now advocate two very different approaches to the practice of marketing.
According to Samuel, the divide is between "online B2B marketers" who "want to gain and convert website traffic into leads" and "offline B2C marketers" who "want to build brands among mass audiences." He wrote: "The result is a new Cold War in which the two sides have different practices, read different publications, attend different conferences, follow different thought leaders, and view the other as outdated or uneducated."
Samuel contends that the big problem with this polarization of marketing is that people in both camps have an incomplete or distorted view of marketing. He wrote: "Both offline B2C and online B2B marketers can learn from the other's news outlets, conferences, and thought leaders - if only they would choose to do so by openly integrating everything into simply 'marcom.' Today, there is no 'offline marketing' and 'digital marketing.' There is only marketing."
Many of the observations in this column are absolutely on point, but I also think that some of the differences Samuel describes exist for valid business reasons. Recently, it's become popular to downplay the differences between B2B and B2C marketing. Some commentators even argue that all marketing should be viewed as "business-to-human" or "human-to-human."
It's certainly accurate to say that virtually all forms of marketing involve the communication of a message to a human being. It's equally true that business decision makers are also consumers, and that the attitudes and preferences they have as consumers don't disappear when they're acting in a professional capacity. This doesn't mean, however, that there are no important or meaningful differences between B2B and B2C marketing.
Samuel argued in his column that the current divide between B2C and B2B marketing is largely the result of longstanding assumptions, the main one being that "B2C is emotional and has short sales cycles while B2B is logical with long sales cycles." He then correctly points out that this assumption is, at best, an oversimplification of reality.
A more practical and meaningful difference between B2C and B2B marketing is that most B2C marketing involves the communication of a relatively simple message to a large or very large audience, while most B2B marketing requires the communication of more complex messages to a relatively small audience. This difference alone dictates the use of different marketing strategies, channels, and tactics.
The combination of simple message-large audience explains why many B2C marketers still emphasize advertising via offline mass media channels. Short ads (think 30 or 60 seconds) can be effective at communicating simple messages, and mass media channels are still an efficient way to reach large audiences.
And despite assertions to the contrary, several recent research studies have shown that advertising still has a significant impact on consumers. For example, in a 2017 survey of 1,030 U.S. consumers by Clutch, 90% of respondents said that advertisements influence their purchase decisions. The Clutch survey also found that TV is still the most influential medium for advertising. Sixty percent of the respondents said they are likely to make a purchase after seeing or hearing a TV ad.
Since many B2B marketers must communicate more complex messages to a relatively small audience of business decision makers, it shouldn't be surprising that they tend to emphasize the use of marketing channels (such as email) that can be more precisely targeted and marketing techniques (such as content marketing) that can accommodate longer communication formats.
So, is there a "Cold War" in marketing as Samuel Scott suggests? I agree that marketers who work in the various marketing disciplines tend to read many of the same publications, attend many of the same conferences, and follow many of the same thought leaders. To some extent, this kind of "tribalism" is inevitable. But it can also create echo chambers in which the particular and narrow perspectives of each marketing discipline are reinforced and amplified.
To combat the pernicious effects of these echo chambers, marketing leaders need to ensure that the members of their marketing teams are regularly exposed to information about the broader aspects of marketing. Such regular exposure helps reduce the impact of echo chambers and avoid the development of marketing silos.
Image courtesy of Vic via Flickr CC.
Sunday, September 16, 2018
With the beginning of the fourth quarter less than a month away, many B2B companies have already started planning for 2019. Over the next several weeks, marketing leaders will be evaluating how well their existing marketing programs have performed and developing plans for the coming year.
To plan effectively for 2019, marketing leaders need a solid understanding for the overall economic and competitive environment and the major trends impacting B2B marketing. The CMO Survey is a valuable resource for information regarding these important issues. The CMO Survey is a joint effort of Duke University's Fuqua School of Business, the American Marketing Association, and Deloitte. The primary objective of the survey is to capture the opinions of senior marketers about important trends in marketing spending and practices.
The August 2018 edition of The CMO Survey generated responses from 324 senior marketing executives at U.S. companies. Two-thirds of the respondents (66.0%) were affiliated with B2B companies. What follows is a brief description of some of the major findings from the latest survey. Unless otherwise indicated, the survey results discussed in this post are based exclusively on the responses of B2B marketers.
View of the Economy
Survey respondents were generally optimistic regarding the health of the U.S. economy. When asked to rate their optimism about the economy on a scale of 0 to 100, the mean of the ratings given by respondents was just over 65. When survey respondents were asked about the level of their optimism compared to the preceding quarter, 35% of the respondents said they were more optimistic, 32% said they were less optimistic, and 33% reported no change.
Note: Both the Federal Reserve and the Conference Board have recently estimated that real GDP growth in 2019 is likely to be between 2.0% and 2.5%, which most economists would consider good, but not great. So, the level of optimism expressed by the survey respondents seems to be about right.
Drivers of Future Growth
The CMO Survey also asked survey participants to rate the importance of five "drivers" of future organic growth in their business. The following chart shows the percentage of respondents who rated each driver as the most important. As the chart shows, a plurality of respondents ranked having the right talent as the most important driver of future growth.
What is interesting about these responses is that having the right technology received only the fourth highest number of first-place votes (out of five possible choices). So in spite of all the hype that now surrounds marketing technology, it appears that marketing leaders understand that while technology is undeniably important, other factors play an even more significant role in driving growth. In fact, when both first-place and second-place votes are considered, having the right technology still ranks fourth.
The CMO Survey found that overall marketing spending increased by about 7% in the 12 months preceding the survey, and that respondents expect marketing spending to grow by about 9% over the 12 months following the survey. Respondents expect spending on digital marketing to increase 13%-14%, while spending on traditional advertising will be essentially unchanged.
The latest survey also shows that marketers expect their spending on social media and mobile marketing to increase rapidly, even though they do not currently see those tactics/channels as having a major impact on company performance.
Respondents from B2B product companies expect social media spending to increase from 9.7% of the marketing budget currently to 18.8% five years from now. Respondents from B2B services companies put the increase at 13.9% of the current marketing budget to 21.6% by 2023. However, 70.9% of respondents from B2B product companies, and 58.5% of respondents from B2B services companies rated the impact of social media on company performance at 3 or less on a 7-point scale.
Mobile marketing shows a similar pattern. Respondents from B2B product companies expect spending on mobile marketing activities to grow from 6.9% of the marketing budget currently to 13.7% in three years. Respondents from B2B services companies put the increase at 7.5% of the current marketing budget to 14.9% by 2021. However, 76.0% of respondents from B2B product companies, and 71.7% of respondents from B2B services companies rated the impact of mobile marketing on company performance at 3 or less on a 7-point scale.
Another aspect of marketing spending that looks similar to social media and mobile marketing is marketing analytics. Survey respondents expect spending on marketing analytics to increase from a little over 6% of the marketing budget today to about 19% of the budget by 2021. It appears, however, that marketers are still challenged to maximize the potential value of analytics.
When survey participants were asked, "In what percent of projects does your company use available or requested marketing analytics before a decision is made?" respondents from B2B product companies reported about 32% of projects, and respondents from B2B services companies said about 29% of projects. In addition, fewer than 20% of respondents reported that the use of analytics made a significant contribution to company performance (a 6 or 7 rating on a 7-point scale). This suggests that being "data-driven" remains more of an aspiration than a reality for many marketers.
Top image courtesy of Marco Verch via Flickr CC.
Sunday, September 9, 2018
Fundamental changes in the business environment have led a growing number of B2B companies to adopt new approaches for managing their revenue generating activities. While the specific approaches vary, they all arise from the recognition that successful revenue generation requires a combination of interdependent activities. Therefore, it's important to view such activities as components of a larger revenue generation process that must be managed holistically.
The need for a new approach to managing revenue generation and growth has been driven by the convergence of several competitive forces, including:
- The growing power and independence of business buyers enabled by an abundance of easily-accessible information
- The need to provide outstanding customer experiences at every touchpoint across the entire customer lifecycle
- The emergence of "as-a-service" and other types of subscription-based (or subscription-like) business models
Meanwhile, the leaders of most B2B companies are under persistent and growing pressures to produce organic revenue growth that is consistent, predictable, and sustainable. To meet this challenge, a growing number of B2B companies have changed how they manage the business activities and processes that impact revenue generation.
The Rise of the Chief Revenue Officer
Some companies have responded to the growth challenge by creating a new C-level position - usually called the chief revenue officer - to manage revenue generating activities. 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 most or all of the company's revenue-related functions.
This would typically include marketing, sales/business development, direct outside sales, channel sales, and customer success/customer service. So, a high-level organizational chart for a typical CRO function would look something like the following:
Until recently, chief revenue officers have largely been a Silicon Valley phenomenon. Most of the early adopters of the CRO role were startup or early-stage SaaS companies. As far as I can tell, there are no reliable estimates of how many (and what kinds of) companies now have a CRO. However, a Google search yesterday - limited to the preceding year - produced about 68,000 results for the term "chief revenue officer." Most of the search results were announcements regarding the hiring of a first-time or new CRO, and most of these announcements were by technology companies.
It appears, therefore, that most CRO's can still be found in technology companies, although it also appears that the use of CRO's is beginning to expand beyond the technology sector.
Revenue Operations Teams
Some B2B companies have sought to address the growth and revenue management challenge by creating revenue operations teams. While this approach is still in its early stages, recent research suggests that the use of revenue operations teams is poised to grow.
Earlier this year, LeanData and Sales Hacker published the findings of The State of Revenue Ops 2018 study. This study consisted of a survey that produced 785 responses. About three out of four of the respondents (73.6%) were sales and marketing professionals, and about 60% were manager-level or higher.
In this study, only 22.4% of the respondents reported having a revenue operations team in their company, but an additional 15.2% said they are currently building one. Most respondents in this survey have a fairly clear picture of what revenue operations encompasses. About 45% defined revenue operations as "a unified alignment of marketing, sales, and customer success," and another 24.3% would add "operations" to the definition.
There was less consensus in the study regarding who should be primarily responsible for revenue operations success. When survey participants were asked who should "own" revenue operations metrics and key performance indicators, respondents provided a range of answers, as the following table shows:
Form Follows Function
The architect Louis Sullivan wrote that "form ever follows function," meaning that the shape of a building should be primarily based on its intended function or purpose. When companies create a chief revenue officer position or a revenue operations team, they are attempting to make the "shape" of their organization reflect the realities of modern revenue generation. Therefore, these approaches represent an important step in the right direction, and the use of both approaches is likely to grow.
Top image courtesy of Chris Potter (ccPixs.com) via Flickr CC.
Sunday, September 2, 2018
B2B companies must be seen as trustworthy to earn the trust of prospects and customers. And science tells us that trustworthiness is based on ability, integrity, and benevolence. The rarest of these attributes is benevolence. This article explains why real benevolence is so uncommon, and what companies can gain by consistently practicing benevolence.
Trust lies at the heart of all business relationships. Most business leaders understand that trust plays a vital role in acquiring new customers and in maintaining strong relationships with existing customers. It's no coincidence that most companies aspire to be viewed as a "trusted advisor" by their customers and prospects.
Trust has been widely studied by psychologists and other social scientists, so we have a sound understanding of what creates a willingness to trust and how trust develops. Most social scientists agree that an individual's willingness to trust another person or an organization - and the level of trust that will develop - largely depends on the perceived trustworthiness of the other person or organization. Most scientists also agree that the trustworthiness of a person or organization is primarily based on three attributes - ability, integrity, and benevolence.
Therefore, the willingness of a potential buyer or an existing customer to trust a vendor depends on whether - and to what extent - the vendor exhibits these three antecedents of trustworthiness. In the trust context, ability and integrity mean what they normally do, but benevolence has a special meaning. The essence of benevolence is putting the interests of a person or organization above your own.
Ability, integrity, and benevolence are equally important for the development of trust, but benevolence is the most potent source of differentiation because it is the rarest of the three trustworthiness attributes. Benevolence is rare, not because most companies are intentionally "malevolent," but because the importance of benevolence is usually underappreciated, and because the non-stop need to grow revenues and otherwise improve business performance makes it harder for people in companies to practice benevolence on a consistent basis.
The Pressure to Perform
The constant pressure to grow revenues and improve business performance can undermine even the most sincere intentions to practice benevolence. Under these pressures, it's very easy to make small compromises on benevolence. But even fairly minor differences in behavior can have significant impacts on the perceptions of prospects and customers about benevolence.
Findings from the 2018 B2B Buying Disconnect study by TrustRadius strikingly illustrate this point. The TrustRadius research consisted of a survey that included responses from 438 B2B technology buyers. Only 23% of the surveyed buyers said their vendors were very influential in buying decisions.
The research revealed that trustworthiness was a distinguishing attribute of influential vendors, and that an aspect of benevolence played an important role in establishing trustworthiness. Fifty-six percent of the buyers who said their vendors were very influential also said their vendors were "very forthcoming about where the product works well and where it is not a good fit." Only 31% of the buyers with less influential vendors described their vendors in these terms.
About 40% of the surveyed buyers with less influential vendors said their vendors "did not proactively address the product's limitations, but did answer all of my questions." Taken together, these responses show that simply answering questions about product limitations isn't sufficient to produce the perception of benevolence that leads to a high level of trust and influence.
The Importance of Benevolence
Benevolence is also rare because its importance and value aren't fully appreciated. A 2016 survey of 2,400 consumers by MECLABS Institute (the research parent of MarketingSherpa) shows why benevolence is so important. For this study, MECLABS divided the survey participants into two equal groups. One group (the "satisfied customers") were asked to think about a company they were highly satisfied with when answering the survey questions. The other group (the "unsatisfied customers") were asked to think about a company they were very unsatisfied with.
When the unsatisfied customers were asked which of thirteen statements were true about their experience with the company, the most frequently selected statement was: "The company does not put my needs and wants above its own business goals." In this survey, 60% of the satisfied customers said the company often or always puts their needs before its business goals, compared to only 16% of the unsatisfied customers.
This study also demonstrates how benevolence contributes to important and valuable business outcomes. MECLABS asked survey participants how likely they were to take several actions, and the following table shows the stark differences between the responses of satisfied vs. unsatisfied customers:
The MECLABS study shows that the "value chain" of benevolence works like this: Benevolence contributes to a perception of trustworthiness, which enhances the development of trust. And trust contributes to a higher level of customer satisfaction, which leads to improved business outcomes.
So, practicing benevolence isn't only "the right thing to do," it's also a powerful driver of business performance.
Top image courtesy of Terry Johnston via Flickr CC.