Sunday, April 23, 2017

What the Subscription Economy Means for B2B Marketers


One of the most profound business developments of the past few years has been the proliferation of companies using subscription-based business models. Of course, subscription-based businesses aren't new. We've been subscribing to newspapers and magazines for decades. What is new is that more and more kinds of goods are being repackaged as services and sold on a subscription basis.

The rapidly growing number of companies that offer "software-as-a-service" is probably the most prominent example of this phenomenon. Software applications that were once sold for a fixed price and distributed via CD's or Internet downloads are now sold on a subscription basis and accessed and used via the cloud. Think Salesforce, Office 365, and B2B marketing automation solutions. The media industry has also been disrupted by companies using subscription-based business models. Think Spotify and Netflix.

What really makes the subscription economy a profound business development is the range of products that can be sold on a subscription basis. GE offers a subscription model for its jet engines. Caterpillar is said to be moving toward selling metric tons of earth moved rather than earth moving equipment. I (and you) can "subscribe" to razors (Dollar Shave Club), groceries (Blue Apron), and even automobiles (Zipcar).

The subscription economy appears to be growing rapidly, and many subscription-based businesses are performing well. A recent study by MGI Research suggests that the subscription economy could exceed $100 billion by 2020. And a recent analysis by Zuora (a provider of software for subscription-based businesses) found that since the beginning of 2012, the sales of subscription-based businesses are growing nine times faster that sales of companies in the S & P 500, and more than four times the rate of US retail sales (including e-commerce).

So, what does the shift to subscription-based business mean for B2B marketers? First and foremost, it means that marketers should focus more of their time and attention on customer retention and growth.

In a subscription-based business, most of the economic value of a customer is realized in installments, over time, rather than when the initial "sale" is made. Because of customer acquisition costs, new customers are invariably unprofitable, and they will not become profitable until they have been "subscribers" for some period of time. So in essence, customer profitability depends directly on the length of the customer relationship, as the following diagram shows.
















Most marketers will acknowledge the importance of customer retention and growth, but most companies are still focused primarily on customer acquisition. In a 2016 global survey of more than 1,000 marketers by Econsultancy in association with IBM Watson Marketing, respondents said that, on average, 55% of their revenues are delivered by customer acquisition activities, and 45% are achieved through customer retention activities.

Delivering great experiences to existing customers is obviously critical for companies that have subscription-based business models because of the dynamics of customer profitability. But the same pattern of customer profitability is also found in many kinds of companies that don't use a true subscription model.

In many types of companies, for example, the first sale to a customer will not be sufficient to make that customer profitable because of the marketing and sales costs that must be incurred to acquire the customer. Most of the profits will result from the customer's subsequent purchases of additional or ancillary products. Epson may have earned some profit when I purchased a new printer about a year ago, but they've almost certainly realized significantly more profits from the multiple ink purchases I've made over the past year.

These dynamics of customer profitability mean that marketers in virtually all kinds of B2B companies should be more focused on nurturing relationships with existing customers.

Top image courtesy of Rob Enslin via Flickr CC.


Sunday, April 16, 2017

B2B Buyers Are Still Skeptical About Vendor Content


A recent research report by TrustRadius paints a rather sobering picture of the effectiveness of B2B content marketing. The B2B Buying Disconnect is based on the results of two surveys. One was a survey of 418 individuals who played a key role in a significant software purchase during the previous two years, and the second was a survey of 190 individuals who worked for software vendors in a marketing or sales leadership capacity.

Although the TrustRadius study focused exclusively on technology buyers and sellers, the results would almost certainly be similar in other cases involving complex B2B products or services.

In the buyer survey, TrustRadius asked participants to select which sources of information they used during their purchasing process from a list of 12 options. Then survey participants rated each information source in terms of helpfulness and trustworthiness. The table below depicts where each source of information ranked across these three dimensions.























There are three primary takeaways from these rankings.

Buyers prefer resources that provide direct experience with the product or service - Survey respondents ranked product demos and free trials as very helpful and very trustworthy.

Buyers value information from third parties - Respondents described referrals from friends, colleagues, or peers as very helpful and very trustworthy. Buyers also ranked user reviews and customer references as very helpful, and they rated conversations with analysts and recommendations by solution consultants as highly trustworthy.

Except for product demos, buyers place little value on most types of vendor-provided information - Survey respondents rated vendor sales reps and sales presentations fairly high in terms of helpfulness, but low in terms of trustworthiness. Respondents ranked vendor or product websites and vendor collateral (e.g. ebooks, case studies, webinars) as the least helpful and least trustworthy sources of information.

These research findings should be a wake-up call for B2B marketers. In the 2017 edition of the B2B content marketing survey by the Content Marketing Institute and MarketingProfs, only 34% of B2B marketers rated their content marketing strategy as extremely or very effective. The comparable percentage was 30% in 2016 and 38% in 2015. The buyer attitudes captured in the TrustRadius study explain (at least in part) why only a minority of companies are achieving a high level of success with content marketing.

As marketers, we need to expect and accept that many potential buyers will view our content with a skeptical eye. To overcome this skepticism, we need to "go the extra mile" to create content that is objective and non-promotional, and most importantly, content that delivers real value to our potential buyers.

Top image courtesy of Terry Johnston via Flickr CC.

Sunday, April 9, 2017

How to Weaken the Grip of the Status Quo


Astute marketing and sales professionals have long understood that their toughest competitor is usually the status quo. In most cases, no sale can be made unless prospects are first willing to consider changing their current methods and practices. Given the importance of the issue, it shouldn't be surprising that many marketing and sales experts have proposed several techniques for "breaking the grip of the status quo."

Recent research by several firms has shown that what business buyers are really looking for is fresh insights about the issues or challenges they are facing and about how to improve their business. Therefore, compelling insights can be an effective mechanism for loosening the grip of the status quo and creating a willingness to consider change.

So, what qualifies as insight, and what distinguishes it from other kinds of information that is used in marketing and sales messaging? CEB defines insight as information that disrupts a prospect's level of comfort with the status quo. Like thought leadership, compelling insights are credible and relevant, and they teach prospects something new. But in addition, insights simultaneously reveal - either directly or implicitly - the disadvantages and/or shortcomings of the prospect's status quo. The objective is to cause the prospect to feel a sense of urgency to act.

Developing insights that will resonate with potential buyers is not an easy task. It requires an in-depth understanding of your prospect's business and of the important developments or trends that are affecting or will impact his or her business.

But what makes developing insights really difficult is the need to bring a unique perspective to these underlying facts and circumstances. If your marketing messages and sales conversations make the same points that your competitors are making, you aren't really providing the kinds of insights that will prompt your prospects to act or differentiate your company from the competition.

One fertile source of effective insights is what Corporate Visions calls unconsidered needs. Corporate Visions identifies three basic types of unconsidered needs:

  1. Unknown needs exist when there is a problem, challenge, or opportunity that a potential buyer is unaware of.
  2. Unmet needs exist when a potential buyer is aware of a problem or challenge, but believes that there's no way to effectively address the problem or challenge. In other words, the buyer believes that the problem is just a "fact of life" that he or she must live with.
  3. Under-valued needs exist when a potential buyer is aware of a problem, challenge, or opportunity, but doesn't understand or appreciate its importance or how quickly its impact will be felt.
Insights can be developed around unconsidered needs in several ways:
  • They can describe the causes and effects of a previously unrecognized problem.
  • They can describe a new or innovative solution for a "fact of life" problem or challenge.
  • They can make the full ramifications and timing of a known issue or problem visible.
The status quo is a powerful competitor, and no technique will win with every potential buyer. But providing insights that disrupt a prospect's comfort with the status quo will give you the best chance to trigger a willingness to consider change.

Illustration courtesy of R/DV/RS via Flickr CC.

Sunday, April 2, 2017

The Attributes of Winning Thought Leadership Content


Two recent studies provide several important insights regarding the role and importance of thought leadership content in the marketing mix. Thought leadership content is often the primary means of creating the initial engagement with a potential buyer. Therefore, it plays a critical role in the marketing efforts of many B2B companies.

The Economist Group Study

Thought leadership disrupted:  New rules for the content age by The Economist Group was based on a survey (conducted in association with Hill+Knowlton Strategies) of 1,644 global marketing and business executives. This survey included both marketers (those who plan, develop, or manage thought leadership content) and executives (those who consume thought leadership content). The results discussed below are based on the responses of executives.

More than two-thirds (68%) of surveyed executives said they consume thought leadership content at least weekly, and almost as many (63%) said they had increased their consumption over the 12 months prior to the survey. However, 75% of executives also said they had become more selective in their content consumption over the preceding 12-24 months, and the executives reported that, on average, they engage with only about 25% of the thought leadership content they see every day.

When executives were asked why they consume thought leadership content, the top three reasons chosen were to encounter thoughts that go beyond current thinking (42%), to identify new business opportunities (34%), and to address existing business problems (28%).

When they were asked what qualities made thought leadership content compelling, the most popular attributes identified were innovative (40%), big picture (36%), transformative (36%), and credible (35%). In contrast, the adjectives most frequently associated with poor thought leadership content were superficial (34%), sales-driven (31%), and biased (28%).

The Grist Study

Last year, Grist, a B2B content marketing agency based in London, commissioned a study to better understand the views of business executives regarding thought leadership content. The Value of B2B Thought Leadership Survey was based on interviews of more than 200 senior executives at FTSE 350 companies.

When surveyed executives were asked why they consume thought leadership content, the three most frequently chosen reasons were to keep me informed of emerging trends (66%), to enable me to make better business decisions (60%), and to help me understand best practices (52%). When they were asked what qualities were most valuable in thought leadership content, the three most favored attributes were fresh thinking (46%), forward-thinking (30%), and evidence-led (29%).

The interviewers also asked participants what caused thought leadership content to fail. The top three attributes identified by executives were too generic - not directly relevant to me (63%), lack of original insight or ideas (58%), and promoting the advisor, rather than addressing my problems (53%).

The Grist study also sought to obtain data regarding the impact of thought leadership content. Surveyed executives said they consume 31% of the thought leadership content they encounter and that 28% of the content they come across has an impact on their decision-making.

The Takeaway

The results of these two studies provide important pointers for marketers who use thought leadership content in their marketing efforts. They demonstrate that effective thought leadership content must be objective and authoritative, and most importantly, it must provide unique and in-depth insights for the target audience.

Illustration courtesy of Abhijit Bhadurl via Flickr CC.

Sunday, March 26, 2017

Multiple Studies Reveal the Growing Adoption of ABM


Unless you've been very out of touch for the past couple of years, you're well aware that account-based marketing has become one of the hottest topics in the B2B marketing world. The hype surrounding ABM has been almost deafening, and based on the hype, it would be easy to conclude that ABM has already been widely adopted by B2B companies.

It does appear that a growing number of companies have implemented (or are at least piloting/testing) account-based marketing, so I thought it would be worthwhile to share the results of several recent research studies that provide insights regarding ABM adoption.

The 2017 Marketing Benchmark Report - North America by Marketo was based on the results of a Q4 2016 survey of contacts within the Marketo customer base (which includes both B2B and B2C companies). The survey produced 1,363 responses. Although the report doesn't provide detailed demographics for the respondents, it's likely that most were marketing leaders or practitioners. In this survey, 34% of the respondents said they were practicing ABM. Marketo also found that the ABM adoption rate was similar for companies of all sizes.

The 2017 State of B2B Digital Marketing Report by DemandWave was based on a survey of B2B marketers in the United States that was conducted in November and December of 2016. The survey produced 179 responses. In this survey, 37% of the respondents said they had tried or were currently using ABM.

In the 2016 ABM Benchmark Survey by Demand Gen Report, 23% of survey respondents said they had been using ABM "for some time," and another 24% said they had "recently launched" an ABM strategy. Demand Gen Report did not provide a description of the survey methodology or demographics for the survey respondents.

The 2016 State of Account Based Marketing (ABM) Study by SiriusDecisions provides some indirect evidence regarding ABM adoption. This study was based on a survey of 200+ B2B companies. In this research, 71% of respondents said they had staff that is fully or partially dedicated to ABM.

Collectively, these studies indicate that account-based marketing has made significant inroads among B2B companies. It's important to remember, however, that none of these surveys used a random sample of all B2B companies. I suspect that the overall ABM adoption rate is somewhat lower than these studies report. That doesn't mean that the shift to ABM isn't real. It just means that the adoption of ABM is still in its early stages.

Illustration courtesy of ccPixs.com via Flickr CC.

Sunday, March 19, 2017

Have We Really Improved Marketing Productivity?


The recent pace of change in B2B marketing has been nothing short of breathtaking. Over the past 10-15 years, new marketing technologies, channels, and techniques have appeared in rapid succession, and many of these innovations are now in widespread use. B2B marketing automation, content marketing, inbound marketing, and social media marketing are just of few of the technologies and techniques that have changed B2B marketing over the past decade or so.

By all indications, the pace of change is not slowing. During the past couple of years, many B2B companies have adopted account-based marketing, and many have begun using predictive marketing analytics technologies to support ABM and other marketing efforts. And just within the past few months, we've started to hear that machine learning and artificial intelligence will have a major impact on B2B marketing in the near future.

All of these innovations have promised to improve marketing effectiveness and efficiency, and numerous research studies purport to show that they are delivering a wide range of benefits. But have these innovations really improved the bottom-line productivity of B2B marketing? Can we show - in a credible and convincing way - that B2B marketing is more financially productive today than it was 10 or 15 years ago?

Obviously, these questions must be answered on a company-by-company basis. Some B2B marketers may be able to show that their marketing efforts have become significantly more productive over the past several years. But there is evidence suggesting that some aspects of B2B marketing performance haven't improved as much as we might have anticipated.

One indicator of B2B marketing and sales productivity is the efficiency of the demand generation process. Efficiency is usually measured by the percentage of potential buyers or leads who are "converting" from one lead stage to the next.

Many B2B companies use the Demand Waterfall model developed by SiriusDecisions to describe the stages of the lead-to-revenue process, and from time to time, SiriusDecisions publishes "average" and "best-in-class" conversion rates that link to the Demand Waterfall. The following table shows the conversion rates reported by SiriusDecisions for 2008 and 2014:

















What is most striking about this data is that it indicates there was essentially no improvement in conversion rates - particularly the overall lead-to-revenue conversion rate - between 2008 and 2014.

The 2008 conversion rates largely reflect marketing productivity before many of the marketing innovations mentioned above had become widely adopted. But research has shown that by 2014, a significant number of companies were using these technologies and techniques.

Of course, lead conversion rates aren't the only relevant measure of marketing productivity, and there may be a reasonable explanation for the lack of improvement shown in the SiriusDecisions data. For example, the 2014 conversion rates would not have captured the impact of the shift to account-based marketing that's occurred over the past couple of years. Nevertheless, this data should be a wake-up call for B2B marketers.

Senior company leaders are increasingly expecting marketers to demonstrate that their activities and programs are creating economic value for the enterprise and improving enterprise financial performance. Many senior leaders are no longer satisfied with the tactical performance indicators (campaign response rates, content downloads, etc.) that marketers have traditionally used to describe marketing performance. What senior business leaders really want to see is proof that marketing is delivering financial results and that the dollars they are investing in marketing are being spent as efficiently as possible.

The important point here is that the value of any marketing technology or method must ultimately be judged by whether its use improves marketing productivity. So that's what marketers must be prepared to demonstrate.

Top image courtesy of Kelly Teague via Flickr CC.

Sunday, March 12, 2017

ABM Success Requires "Unnatural" Teamwork


One of the most formidable challenges related to account-based marketing is the need to build and sustain a high level of teamwork among business functions that have historically operated more or less independently. ABM obviously requires a tight alignment between marketing and sales. And when ABM is used to expand relationships with existing customers, the need for alignment will also extend to the customer service/customer success function of a company.

Some ABM experts now speak in terms of account-based everything to make the point that ABM actually encompasses far more than marketing.

Unfortunately, some company leaders don't fully appreciate how much and what kind of teamwork is required for ABM success. For example, most ABM thought leaders and practitioners agree that marketing and sales should jointly:

This level of collaboration is necessary to create a solid foundation for a successful ABM program, but it's really just the starting point. To reap the maximum benefits from ABM, marketing and sales must jointly develop an engagement plan for each target account. This account plan will usually span several weeks to several months, and will likely include marketing and sales activities that must be closely coordinated to produce maximum results. 

In addition, marketing and sales must be ready to make on-the-fly adjustments to their account plan based on actual buyer responses and changing business conditions at each account.

Therefore, successful ABM requires marketing and sales (and in some cases customer service) to work collaboratively on an ongoing basis. This level of coordination is challenging for many companies because it represents a major change in how they have traditionally managed sales leads.

In many B2B companies, the demand generation process involves a series of "hand-offs" from one business function to another. For example, marketing passes leads to business/sales development, which passes leads on to sales. 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. This approach makes it relatively easy to manage demand generation within traditional organizational structures.

The relay race approach has never been the optimum way to manage demand generation, and it won't be effective in an ABM program. To address this challenge, some companies create cross-functional account teams to manage and coordinate the activities relating to their ABM accounts. To use a sports analogy, an ABM account team functions more like a basketball team than a 4 x 100 meter relay team. In an ABM account team, every team member is involved (in one way or another) throughout the entire game, and their roles change on a fluid basis.

The important point here is that successful ABM requires an exceptional level of cross-functional teamwork that isn't "natural" for many companies. Some ABM pundits contend that account-based marketing will create better alignment between marketing and sales, but this just isn't so.

The decision to adopt ABM can be the catalyst for creating better marketing-sales alignment, but ABM won't cause such alignment to magically appear. It's more accurate to say that good alignment between marketing and sales is a necessary prerequisite for successful ABM. Therefore, company leaders must be prepared to create and implement the structures, processes, and culture that are required to make the necessary teamwork a reality.

Illustration courtesy of Katlene Niven via Flickr CC.

Sunday, March 5, 2017

Solving the "Dry Well" Challenge of Content Marketing


Consistently producing content that connects with potential buyers remains one of the greatest challenges facing B2B marketers. The need to make content relevant for individual buyers at every stage of the buying process, to publish content in multiple formats across multiple channels, and to publish new content frequently have combined to strain the creativity and resources of B2B marketers.

In the early stages of a company's content marketing efforts when marketers are focused on "building out" their content library, it's relatively easy to identify good topics for content resources. But after the initial build-out phase is completed, it can become more difficult to identify content topics that are relevant and fresh.

Of course, some topics need to be addressed more than once. It's important, for example, to update your content when the capabilities of your product change, or when new research about a topic becomes available. But sooner or later, many B2B marketers will feel that their well of relevant and meaningful topics has run dry.

To address this challenge, marketers need to think more broadly about the kinds of topics that can be effective in their content marketing program. From a topical perspective, there are four basic types of content (shown in the following diagram).






















Product Content - This is just what it sounds like - content that describes the features and functionality of a product or group of related products. In a 2015 study by LinkedIn, business buyers ranked product info, features, functions as their most preferred type of marketing/sales content.

Product Category Content - This is basically "educational" content that discusses issues or needs that a type of product or service can address. When a provider of account-based marketing software creates content that explains why ABM is a more effective approach to marketing, or describes what capabilities buyers should look for in an ABM solution, that's product category content. Good product category content usually doesn't promote a specific product, but it does "evangelize" the product category.

Most of the marketing content created by B2B companies (excluding pure brand advertising) falls into one of these two categories, and these are the types of content topics that marketers focus on first. This is a valid approach, but these two categories will only provide so many good topics for content resources.

There are, however, two additional types of content that can complement product and product category content, and thus provide a valuable source for good content topics.

Business Function Content - This type of content addresses issues relating to the job responsibilities of your potential buyers, but which aren't directly related to your company's product or service. For example, suppose that your company offers a sales enablement solution to financial services firms. Your buying group will almost certainly include chief marketing officers and chief sales officers. Once you've developed enough product and product category content, you can create content resources that address more general marketing and sales issues. This type of content could include topics such as:

  • How to win business from millennial investors
  • How financial advisors can use social selling to attract and win new clients
Industry-Related Content - This type of content discusses issues that are related to the industry in which the prospect operates. To continue with my financial services example, the sales enablement provider could create content around topics such as:
  • The impact of "robo-advisors" on traditional financial services firms
  • New (or pending) governmental regulations affecting financial services firms
You may be wondering why you should create content that isn't closely related to your company's product or service. One of the objectives of content marketing is to demonstrate that you understand the issues and challenges that your prospects and potential buyers are facing. Product category content helps you achieve this objective, but so can business function content and industry-related content.

Top illustration courtesy of Paani Program via Flickr CC.

Sunday, February 26, 2017

Does Account-Based Marketing Make Buyer Personas Unnecessary?


Last week, Jason Stewart, the Vice President for Strategic Content at Annuitas, published a great article at LinkedIn titled "What the C-Suite Needs to Know About Account-Based Marketing."

In this article, Jason argues that ABM represents a major step in the right direction for many B2B companies, but he also contends that it falls short of being a comprehensive demand generation strategy. He writes, "ABM is an extraordinarily smart way to make the right tactical decisions when it comes to demand generation, but the elite Account-Based Marketers are still building personas, nurturing every step of the buyer's journey, and know exactly which activities and leads are driving revenue."

I would suggest that Jason's article is particularly on point when it comes to the issue of buyer personas. Most ABM experts say that account-based marketing involves a fundamental shift from "lead-centric" marketing to "account-centric" marketing. But does this mean that ABM diminishes the importance and value of buyer personas? The answer to this question is an emphatic "No," and I'll explain why momentarily. But first, a little historical perspective is in order.

Buyer personas have been a core element of B2B marketing for more than a decade. The origin of buyer personas is usually traced to the practice of creating user personas to help software engineers develop more user-friendly applications. User personas made their appearance in the late 1990's, and we started hearing about buyer personas a few years later.

In the B2B world, buyer personas are intended to help marketing and sales professionals better understand the people who influence business buying decisions, but the importance of this understanding was recognized long before anyone had ever heard of buyer personas. Consider, for example, the following quotation from Organizational Buying Behavior by Frederick E. Webster, Jr. and Yoram Wind published more than four decades ago:

"Although organizational buying is the result of organizational decision making, individual behavior defines this decision-making system. Each person involved in the buying process brings to it a set of needs, goals, habits, past experiences, information, attitudes, and so on which he applies in each specific situation. . .

An efficient and effective marketing strategy for organizational buyers must be aimed at specific individuals who have authority and responsibility for buying decisions, not at some broad conception of the 'organization,' for individuals, not organizations, make organizational buying decisions."

When you implement account-based marketing, the first two steps in the process are to select target accounts and identify the relevant contacts (i.e. buyers) in each target account. The third step in the process is to develop deep insights regarding each account. With ABM, therefore, you will identify the actual buyers, and you will develop deep account insights before you begin your marketing program. Doesn't this knowledge reduce the need for buyer personas?

In reality, buyer personas are still essential for effective ABM because every buyer at each target account will bring his or her individual perspectives to the buying process, and it's still important to have marketing messages and marketing content resources that address those individual buyer perspectives. Today, it is possible to learn more about our actual buyers than in the past, but even "big data" won't consistently reveal the goals, objectives, and motivations of individual buyers.

So, we still need buyer personas to fill those gaps in our understanding. As we interact with actual buyers, we can and should use those interactions to learn more about the specific goals, interests, and perspectives of our buyers. And we should use those insights to fine-tune our marketing messages and content. As we learn more about our actual buyers, we can rely less on buyer personas for insights about those specific buyers. But buyer personas still provide a critical starting point for effective ABM.

Illustration courtesy of Rick B via Flickr.

Sunday, February 19, 2017

How Small and Mid-Size Companies Will Practice Marketing in 2017


Target Marketing magazine recently published the findings of its annual "Media Usage Survey," which was designed to identify marketing spending plans for 2017. The survey was conducted in December 2016 and produced 725 responses from members of the audiences of Target Marketing and subscribers to Total Retail and NonProfit Pro magazines. The researchers suppressed participation by list services firms and creative services/advertising agencies so that all responses would be from marketers.

Forty-two percent of the respondents were affiliated with B2B companies, 36% with hybrid B2B/B2C companies, and 22% with B2C companies. Most of the survey respondents worked for small and mid-size companies:

  • 17% were with companies having $51 million or more in annual revenue
  • 22% were with companies having annual revenue of $5 million to $50 million
  • 50% were with companies having less than $5 million in annual revenue
Most of the respondents to the Target Marketing survey reported that their marketing budget for 2017 would the same or higher than in 2016. Thirty-seven percent said their 2017 budget would be higher, and 40% said their budget would stay the same compared to 2016. Only 15% of respondents said their marketing spending would be lower in 2017 than in 2016.

At larger companies, changes in marketing budgets showed greater variation. Fifty-one percent of respondents from companies with annual revenue of more than $50 million reported an increased marketing budget for 2017, while 20% of such respondents said they have a lower marketing budget this year.

Target Marketing also asked survey participants about the allocation of their marketing budget. The top four media categories identified by survey respondents were:
  1. Online marketing - on average, 36% of the total marketing budget
  2. Print (direct mail, magazines, newspapers, circulars, etc.) - 22%
  3. Live events - 19%
  4. Other - 13%
The report's authors noted that print experienced the biggest year-over-year change, falling from 29%  of the total marketing budget in the 2016 edition of the survey.

The survey also asked participants how their spending on specific marketing methods would change in 2017. The following table shows the top six marketing methods slated for spending increases this year:




















Survey respondents reported that email marketing produces the best ROI for both customer acquisition and customer retention purposes. They also said that "Other" marketing methods produced the second strongest ROI for both acquisition and retention, and that direct mail produced the third-best ROI for both purposes.

The survey report did not indicate what marketing methods were included in the "Other" category. Given that these marketing methods command a significant percentage of the total marketing budget and produce strong ROI, it would be nice to know what specific methods the "Other" category encompasses.

Sunday, February 12, 2017

What You Need to Know About Target Accounts for ABM Success


One of the fundamental characteristics of account-based marketing is the use of marketing messages and content that are tailored for specific target accounts. When company leaders adopt an ABM strategy, they make a conscious decision to focus most of their demand generation efforts on a relatively small number of potential customers. In this situation, it's critical to make marketing communications as effective as possible, and the best way to do that is to use customized content resources that are hyper-relevant for each target account.

Many marketers believe that the need to customize marketing content for individual target accounts constitutes one of the biggest challenges associated with ABM. But it reality, the more difficult job is developing the insights about target accounts that are needed to make customized content truly effective. Deep account insights are required to customize content in ways that will resonate with the buyers in target accounts. Without such insights, any customization that's done will be superficial and largely ineffective.

So, what kinds of account insights are needed to develop effective ABM content? In The Clear & Complete Guide to Account Based Marketing, Engagio provides a "laundry list" of the things marketers need to know about:

  • The target account's industry - The competitive structure, key trends, and growth dynamics of the industry in which each target account operates
  • The target account - The account's stated business strategy, its strengths, weaknesses, opportunities, and threats, its financial condition, its major competitors, its buying structure and process, its organizational culture and values, and the presence or absence of any recent buying triggers
  • The buying group - The identity of the members of the relevant buying group, and their priorities and communication preferences
  • Account connections - Any existing relationships or connections between the selling company and the target account and/or the members of the buying group
It should be clear that developing deep account insights is a significant undertaking, and it's a job that must be done primarily by people. Technology can play a role in developing deep account insights by making it easier to gather data about target accounts and perform the other research that's required for insight development. But you still need human creativity and judgment to translate the raw data and information into meaningful insights. Therefore, the ability to scale this component of ABM using technology is somewhat limited.
Many companies have addressed the "insight challenge" by adopting a tiered approach to account-based marketing. The top tier, also known as Strategic ABM, is reserved for those accounts that offer the greatest potential value. In a recent survey by ITSMA, the median number of accounts included in Strategic ABM programs was 10. 
Companies focus most of their insight development work on these Strategic ABM accounts. They develop detailed account profiles, and they update those profiles frequently. This in-depth research enables companies to create and use highly customized marketing content and programs for Strategic ABM accounts.
The second tier of account-based marketing, often called ABM Lite, will include a larger number of accounts that have less potential value than Strategic ABM accounts. Therefore, companies typically perform less in-depth research and build less detailed profiles for their ABM Lite accounts. 
For example, a company may have several ABM Lite accounts that operate in the same industry. In this situation, the company will probably conduct sufficient research to develop detailed insights regarding the relevant industry, but it will gather only basic information about each individual account.
Developing the appropriate level of account insights isn't easy, but it's absolutely essential for ABM success. As Engagio wrote in its ABM Guide, "The entire strategy [ABM] depends on doing your homework and learning as much as you possibly can about target accounts (and key buyers at those accounts) so you can maximize your relevance and resonance within each." (Emphasis in original)

Illustration courtesy of Nico Kaiser via Flickr CC.

Sunday, February 5, 2017

Research Confirms that Customer Experience Drives Financial Performance


It's no secret that B2B marketers have become intensely focused on improving the quality of the experiences they provide to existing and potential customers. In the B2B Digital Trends 2016-2017 report by Econsultancy and Adobe - which was based on a survey of more than 1,000 B2B marketing, digital, and ecommerce professionals - respondents identified optimizing the customer experience as their most exciting opportunity in 2016 and for the next five years.

Over the past few years, there's been a significant amount of research regarding the benefits of improving customer experiences, but most of the research has focused on qualitative benefits, such as improved customer loyalty. Some research firms have addressed the issue of how much financial value a company can realize by improving customer experiences. For example, Forrester Research and the Temkin Group perform regular studies to quantify the economic value of improved customer experiences in several industries.

A recent study sponsored by Avanade and Sitecore provides some fairly compelling evidence that investing in better customer experiences can drive significant financial benefits. This study was based on interviews with 880 business leaders who have responsibility or influence over their company's customer experience efforts. More than 650 of the interviewees said their company "prioritizes" its customer experience strategy, and many of the study's findings are based on the responses from this group.

The most attention-grabbing finding in this study is that respondents said their company realized $3 in benefits for every $1 it spent on improving customer experiences. Four out of ten respondents reported increased revenues, 38% said they achieved better financial performance than their competitors, and 37% said they improved sales cycles. Where these benefits were seen, the improvements were substantial. Respondents reported an average improvement of between 18% and 21% in each of these dimensions.

Respondents also reported that improving customer experiences produced increased levels of customer satisfaction (58%), increased customer loyalty (45%), and increased levels of customer acquisition and retention (41%). Once again, these benefits were significant where they were seen. Respondents said they saw an average improvement of between 19% and 22% in each of these areas.

The Avanade/Sitecore research provides more evidence that improving customer experiences is a sound strategy for virtually all kinds of companies. While this study didn't focus exclusively on B2B companies, other research - such as the Econsultancy/Adobe study mentioned earlier - has demonstrated that customer experience is as important in B2B as it is in B2C.

Illustration courtesy of frontriver via Flickr CC.


Sunday, January 29, 2017

The Operational Challenges That Come With ABM


The interest in account-based marketing has been growing dramatically for the past few years, largely because many B2B marketers believe that ABM will outperform other approaches to marketing. Not surprisingly, there is also  a great deal of hype surrounding account-based marketing, and this hype tends to minimize some of the challenges associated with building a successful ABM program.

The reality is, moving from traditional demand generation marketing to ABM can require companies to make some significant changes in how the marketing department operates, and these changes can be challenging for many companies.

Many B2B companies - particularly larger companies - structure their marketing operations by function (e.g. demand generation, product marketing, public relations, etc.) and/or by marketing channel (e.g. email, social media, etc.). As the name implies, account-based marketing requires marketing activities to be designed for identified target accounts, which can require staff marketers to take on new or different responsibilities.

How much change is needed depends largely on the overall size of the ABM program and on what specific type or types of ABM a company is implementing. Most ABM thought leaders and practitioners now recognize three "varieties" of ABM:

  • Strategic ABM involves a very small number of target accounts and is extremely resource intensive. It typically involves the use of marketing content and marketing programs that are customized for each target account.
  • ABM Lite focuses on groups of identified accounts that share similar business attributes and needs. It involves a larger number of accounts, but is less resource intensive than Strategic ABM. For example, marketing content and marketing programs may be customized for segments of target accounts, but not for individual accounts.
  • Programmatic ABM emphasizes the use of new technologies to apply ABM-inspired techniques to a large number of accounts. It is the least resource-intensive variety of ABM, at least in terms of human resources.
There's not a great deal of published research about how companies are implementing ABM at the operational level. However, last spring ITSMA published the results of a survey that addressed some of the operational challenges that come with ABM.

In the ITSMA survey:
  • The median number of accounts included in Strategic ABM programs was 10, while the median number of accounts in ABM Lite programs was 30.
  • In Strategic ABM programs, the median number of accounts per dedicated marketer was 4, and the median number of accounts per part-time marketer was 3.
  • In ABM Lite programs, the median number of accounts per dedicated marketer was 9, and the median number of accounts per part-time marketer was 10.
This one survey doesn't constitute the final word on the subject, but it does provide an indication of what human resources are required to run a successful ABM program. Suppose, for example that your company is planning to launch an ABM program that will have 10 Strategic ABM accounts and 30 ABM Lite accounts. Based on the ITSMA data, you will probably need to assign 2-3 full-time marketers to your Strategic ABM program and about 3 full-time marketers to your ABM Lite program.

Whether or not these numbers are exactly right, the important point here is that successful ABM requires a significant commitment of human resources. Much of the hype surrounding ABM has focused on how technology can enable companies to scale ABM efforts. While the right technology tools can automate certain aspects of ABM, it's critical to remember that effective ABM still needs a substantial amount of human time and skill. Therefore, marketing leaders need to think through what human capabilities will be required for their ABM program and then create a plan for supplying those capabilities.

Illustration courtesy of Till Westermayer via Flickr CC.

Sunday, January 22, 2017

The Promise and Peril of Personalization at Scale


Marketers in virtually all kinds of companies are now intensely focused on improving the quality of the customer experiences their companies provide. Most marketers believe that the ability to personalize marketing offers and messages for individual customers at every touch point is critical to delivering outstanding customer experiences.

Numerous research studies have shown that personalized marketing can be highly effective. For example, in a 2016 survey of more than 1,500 US and UK consumers by Accenture Interactive, almost two-thirds (65%) of respondents said they are more likely to make a purchase from a retailer that sends them relevant and personalized offers. But there are also many well-documented examples of personalized marketing efforts that have failed miserably because they were clumsily executed, or because they were seen as a "creepy" invasion of privacy.

The ability to "personalize at scale" is highly dependent on data and technology. Many companies are already using data and predictive analytics technologies to automatically generate personalized marketing messages without human involvement, and many marketers believe that this practice will only become more commonplace. In fact, it's difficult to envision how personalization at scale can be achieved without a heavy reliance on data and technology.

But this creates a conundrum for marketers that I contend isn't fully appreciated. Automated, data-driven personalization will make personalization at scale more achievable, but it also increases the danger of getting personalization wrong.

An article by Charles Duhigg in The New York Times Magazine provides a great illustration of both the promise and the peril of automated, data-driven personalization. In this article, Mr. Duhigg describes how personalized marketing caused an unwitting father to discover that his teenage daughter was pregnant.

When I decided to write about this topic, my intention was to briefly summarize the content of Mr. Duhigg's article, but I quickly determined that a brief summary simply would not do justice to the subject matter of the article. I strongly recommend that you take the time to read the entire article if you are involved in developing personalized marketing programs.

For me, there are three important takeaways from the article.

  • First, data and predictive analytics can enable marketers to develop marketing messages and offers that are highly relevant for individual customers and prospects. 
  • Second, relevance alone is not enough to ensure that a personalized marketing program will be successful. It takes sound human judgment to evaluate factors that data and analytics simply cannot capture. 
  • And third, sometimes it is more effective to make marketing messages less personalized, particularly when the subject matter touches a highly personal or otherwise sensitive topic.

(Note:  Mr. Duhigg's article is fairly long. The beginning and ending portions of the article contain the material that pertains directly to personalized marketing. The middle part of the article focuses on the power of habit in human decision making. The entire article is well worth reading.)

Image courtesy of Josh Hallett via Flickr CC.

Sunday, January 15, 2017

The Economics of ABM Account Selection


From all indications, account-based marketing is quickly becoming a core marketing strategy for many B2B companies. The growing popularity of ABM is largely the result of a widespread perception that it can produce a higher ROI than any other approach to marketing.

There's also a tremendous amount of hype surrounding ABM, and this hype can obscure or minimize some of the challenges associated with ABM. To put it bluntly, some of the tasks required for ABM are more complicated and/or require more work than many marketers anticipate.

One of these tasks is selecting and prioritizing ABM target accounts. Most ABM experts agree that account selection is the most critical component of any ABM program. Companies typically choose their target accounts by identifying businesses that closely resemble their existing customers, a technique that's known as look-alike modeling. The basic idea behind look-alike modeling is that companies that closely resemble your existing customers will be more likely to purchase your products or services.

It's important to recognize, however, that buying potential alone doesn't make a company an attractive account for ABM. The other necessary attribute is that the prospective target account must have the potential to be a highly profitable customer for your company. For ABM purposes, the best measure of potential profitability is customer lifetime value (CLV), which can be defined as the present value of the total profits that you expect to earn from the prospective account over the full duration of the customer relationship.

Estimating the CLV of prospective ABM target accounts is a critical part of the account selection process because of basic economics. New customers will contribute to profitable growth only if the profits they create exceed the costs you incur to acquire them. Therefore, the estimated CLV of a prospective customer establishes the ceiling for how much you should invest to acquire that customer.

The implementation of ABM may or may not require an increase in your overall demand generation budget, but your customer acquisition spending - on a per account basis - will be higher for ABM accounts. You need reasonable CLV estimates in order to effectively manage your ABM customer acquisition costs.

The CLV of prospective target accounts becomes even more important if you are implementing more than one variety of ABM. Most ABM thought leaders recognize three varieties of ABM. Strategic ABM involves a very small number of target accounts and is very resource intensive. ABM Lite focuses on groups of identified accounts that share similar business attributes and needs. It involves more accounts, but is less resource intensive than Strategic ABM. Programmatic ABM emphasizes the use of new technologies to apply ABM-inspired techniques to a large number of accounts, and it is the least resource-intensive variety of ABM.

As you might expect, the costs associated with the three varieties of ABM will differ significantly. For example, over the course of a year, you may well spend more on your Strategic ABM program - which might involve, say, 10 or so accounts - than you spend on your ABM Lite program - which might involve 50 to 100 accounts. Having a reasonably accurate estimate of the CLV of your prospective target accounts helps you place each account in the right ABM tier.

Many ABM technology solutions leverage predictive analytics to both streamline and enhance the look-alike modeling aspect of ABM account selection. Mastering the economics of ABM account selection still requires some manual work and a good deal of human judgment.

Illustration courtesy of Emillo Kuffer via Flickr CC.

Saturday, January 7, 2017

Why It's Time to Reset Expectations for Content Marketing


Mark Ritson, a marketing professor at the Melbourne Business School in Australia, recently published a column at Marketing Week titled "Is content marketing a load of bollocks?" As you might expect, the column created quite a stir in the content marketing world.

Professor Ritson makes two arguments in his column. First, he contends that content marketing isn't really different from "regular" marketing communications. And second, he argues that most of the content produced by content marketers is ineffective. He writes, "A study by software firm Beckon recently revealed that although the amount of content being marketed has tripled in the past year, there has been no increase in engagement. Just 5% of the total content produced generated 90% of the customer engagement meaning that 19 out of 20 pieces of content marketing have little if any impact."

It shouldn't be surprising that most content marketing advocates don't share Professor Ritson's view. Most proponents of content marketing will readily acknowledge that content marketing efforts are often ineffective, but they argue that's because many companies aren't doing content marketing correctly. They contend that many companies are still producing bad content, or are haphazardly creating content without having a sound content marketing strategy. Supporters argue that content marketing is effective when it's done the right way.

Recent research provides support for both points of view. The Beckon study cited by Mark Ritson echos the findings of earlier research by TrackMaven, which also found that content volume is increasing while content engagement is decreasing.

On the other hand, the 2017 B2B content marketing survey by the Content Marketing Institute and MarketingProfs (published a few weeks ago) found that doing the right things in the right ways will have a major impact on content marketing success. In this research, survey respondents who rated their company's content marketing efforts as extremely or very successful were also more likely to say that their company:

  • Has a documented content marketing strategy
  • Is extremely or very committed to content marketing
  • Is clear on what an effective/successful content marketing program looks like
  • Measures content marketing ROI
The reality is, marketing leaders can do a great deal to improve their odds of achieving success with content marketing. But it's equally true that the ability of any company to achieve content marketing success is also affected by competitive forces that are beyond the company's control.

In a post published in January of last year, I argued that content marketing success would be harder to achieve in 2016 for three reasons:
  • The amount of content available to potential buyers has increased dramatically, and the competition for buyer attention has become more intense.
  • The growing use of content marketing best practices tends to make content marketing programs look alike, which makes differentiation more difficult.
  • While companies are still producing a lot of bad content, there's also a growing volume of good content available in the marketplace, which allows potential buyers to be more choosy about the content they consume. This makes it more challenging to consistently produce content that will win mindshare.
These competitive forces are more potent today than they were a year ago, which means that achieving content marketing success will only become more challenging.

It addition, increasing competition in the content marketplace means that marketing and business leaders must have realistic expectations for what content marketing can achieve. The important question for B2B marketers is:  Will a well-conceived and well-executed content marketing program be more effective at driving profitable revenue growth for my company than alternative marketing methods? For most B2B companies - particularly those that offer complex and/or expensive products or services - the answer to this question will almost certainly be yes.

The 2015 version of Gartner's Hype Cycle for Digital Marketing showed content marketing on the decline - having passed the peak of inflated expectations and beginning the slide toward the trough of disillusionment. The 2016 version of the hype cycle put content marketing even closer to the trough of disillusionment, which suggests that content marketing is in for a couple more years of rough sailing.

But what's really important is that once content marketing passes through the trough of disillusionment, it will emerge onto a slope of enlightenment and move toward the plateau of productivity where marketers will have a realistic view of what content marketing can accomplish and what is truly required to build effective content marketing programs.

Illustration courtesy of DigitalRalph via Flickr CC.