Sunday, December 15, 2013

Why B2B Branding Still Matters

Most of the content that's been published recently about B2B marketing has focused on demand generation topics such as lead generation, lead nurturing, and lead qualification. This is understandable because the providers of B2B marketing automation software have been prolific at developing and publishing content resources that are centered on those topics.

B2B brand marketing or "brand building" has received considerably less recent attention from marketing industry commentators. Some respected marketing experts have even asserted that branding is no longer important for most B2B companies and that new marketing techniques have made B2B branding largely obsolete.

Recent research by CEB and McKinsey & Company reveals that branding remains critical to the success of most B2B companies and that brand building is still an essential marketing function.

In a 2013 study titled From Promotion to Emotion, CEB studied the impact of a strong brand connection on various buyer behaviors. CEB compared the behavior of high brand connection customers with no brand connection customers. High brand connection customers were those who gave brands high scores for trust, image, and industry leadership. The CEB study found that high brand connection customers were:
  • 5 times more likely to give consideration to a brand
  • 13 times more likely to purchase from a brand
  • 30 times more likely to be willing to pay a premium for a brand's products or services
Research by McKinsey has also found that strong brands create significant value for B2B firms. For example, B2B companies with strong brands generate a higher operating profit (EBIT) margin than other firms. According to McKinsey, in 2012, strong brands outperformed weak brands by 20%, up from 13% in 2011.

A strong brand is critical for B2B companies because of the role it plays in a buyer's decision to make a purchase. Most marketers tend to view B2B buying as a rational process. We usually say that business buyers make purchase decisions by following a logical, step-by-step process and move through stages that we label something like awareness, consideration, evaluation, and purchase.

It turns out, however, that B2B buying behavior is often far from rational and that emotions play just as big a role in B2B buying as they do in consumer buying. More importantly, it's now clear that the most powerful emotion in B2B buying is fear. As Gord Hotchkiss wrote in The BuyerSphere Project, "B2B buying decisions are usually driven by one emotion - fear. Specifically, B2B buying is all about minimizing fear by eliminating risk."

A strong brand alleviates some of the fear that business buyers inevitably experience (even if only subconsciously) when they're facing a major purchase decision. The power of a brand to reduce the perception of risk is captured in the old saying:  "Nobody was ever fired for buying from IBM."

The marketing techniques used for brand building have certainly changed. Traditional brand building methods and tactics are far less effective today than they once were. Business buyers are quick to tune out promotional marketing messages, so what companies need is a more effective method for building the brand and communicating the brand promise. As I argued in an earlier post, content marketing is now the best way to build the brand for most B2B companies. The tactics may have changed, but B2B branding is as important today as ever.

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