Sunday, May 31, 2015

New Research on Website Content and Social Media Impact

Earlier this year, Huff Industrial Marketing, KoMarketing, and BuyerZone published their 2015 B2B Web Usability Report. The report is based on a survey of business leaders that generated 262 responses. So, while this wasn't a particularly large survey, several of the findings deal with issues that are important for B2B marketers.

Remember the Basics

The first important takeaway from this research is that companies should keep the basics in mind when designing their website and developing website content. When survey participants were asked what kinds of information they want to see on a website home page, the top three responses were:

  • Product and service information (86% of respondents)
  • Contact information (64%)
  • About us/company information (52%)
Survey respondents were particularly concerned about the availability of thorough contact information - a telephone number, an e-mail address, and a mailing address. For example, when survey participants were asked what types of content were missing on company websites, 51% of respondents identified a lack of thorough contact information. Fifty-four percent of the survey respondents said that a lack of contact information reduced a vendor's credibility, and 44% said they would leave a vendor website that lacked thorough contact information.

Frankly, I find it surprising that any company would fail to include complete contact information on its website and make that information easily accessible. I don't encounter this problem very often, but it appears that others do.

The Impact of Social Media

The authors of the survey report state that the impact of social media on the buying journey is not as significant as marketers have assumed. I interpret the survey findings a little differently.

The survey included specific questions relating to the effect of social media on three phases of the buyers' journey - discovery, establishing credibility, and the impact on the buying process.
  • When asked if social media aids them in the vendor discovery process, 59% of survey respondents said "Yes" or "Sometimes."
  • When asked if social media activity helps establish a company's credibility, 57% of respondents said "Yes" or "Sometimes."
  • When asked how much a company's social media activity impacts their vendor decision-making process, 3% of respondents said "A lot," 20% said "It's important but not a deal breaker," 30% said "Neutral," and 46% said "Not a factor."
These results suggest that social media does play a fairly significant role in the earlier stages of the buying journey. It should not be surprising that buyers rely less on social media during the later stages of the buying process. Also, we know that the use of social media varies by age. Fifty-eight percent of the respondents to this survey were over 50, and another 22% were over 35. So, given the age profile of these respondents, this survey actually shows that social media plays a relatively important role in the buying journey.

Sunday, May 24, 2015

Why B2B Marketers Should Focus More on Existing Customers

Most of the recent research, literature, and conversation about B2B marketing has focused on its role in building brand awareness and acquiring new customers. Less attention has been given to the critical roles that the marketing function and marketing content should play in sustaining and enhancing relationships with existing customers.

For decades, business and marketing thought leaders have touted the importance of creating and maintaining strong relationships with existing customers. Research studies going back to the early 1980's have repeatedly shown that it's more expensive to acquire a new customer than it is to retain an existing customer.

In the early 1990's, Don Peppers and Martha Rogers popularized the importance of understanding customer lifetime value and of competing for share of customer rather than overall marketing share in The One to One Future. In 1996, Fred Reichheld showed that creating loyal customers drives higher profits and shareholder value in The Loyalty Effect:  The Hidden Force Behind Growth, Profits, and Lasting Value.

But despite the long-standing recognition that retaining customers is vitally important, recent research shows that many companies are still under-emphasizing customer retention in their marketing efforts. For example, in a 2014 survey by Forbes Insights, only 38% of respondents said their company is primarily focused on existing customers for revenue growth, while 49% said their company is still focused primarily on acquiring new customers. Seventy-nine percent of the respondents to the Forbes survey said that customer lifetime value (CLV) metrics are valuable in their planning, but only 58% said they regularly calculate CLV.

In reality, managing relationships with existing customers is more important today than ever before. Astute business leaders across virtually all industries now recognize that delivering outstanding customer experiences - both before and after the initial purchase - is paramount to competitive success. Last year, research by Gartner found that 89% of companies expect to compete mostly on the basis of customer experience by 2016. And Walker Information recently wrote that by 2020, customer experience is expected to surpass product and pricing as the key business differentiator. (Customers 2020:  The Future of B-to-B Customer Experience, Walker Information, Inc., 2004)

Relationships with existing customer are also becoming more important because of the growing popularity of "subscription" business models. With a subscription model, companies offer their products as services rather than physical objects. For these companies, the economic value of a customer is realized in installments, over time, instead of at the time the initial "purchase" is made, and customer profitability depends largely on the length of the customer relationship. Subscription based businesses are now found in a wide range of industries, including media, entertainment, computer storage, and both personal and business software.

In several other types of businesses, most customers make multiple, independent, and relatively small purchases over time. For these companies, maintaining strong relationships with existing customers is just as important as it is for subscription-based businesses.

The bottom line is that most B2B companies should be paying more attention to strengthening relationships with their existing customers, and B2B marketers should play a leading role in those efforts. In a future post, I'll discuss how marketers can develop content that will help nurture and enhance relationships with current customers.

Sunday, May 17, 2015

Why Marketing-Sales "Alignment" Is No Longer Enough

Marketing and sales alignment has been a hot topic for most of the past decade. Over the past ten years, many B2B companies have made marketing-sales alignment an important business priority, and some companies have made progress in improving the relationship between their marketing and sales teams. In a survey of marketing and sales professionals published earlier this year by Callidus Software, 72% of respondents said their marketing and sales teams are fully or somewhat aligned.

Despite the progress, however, the methods typically used to coordinate marketing and sales activities are not adequate to optimize demand generation performance in most B2B companies. The conventional approach to marketing-sales alignment usually involves some version of three steps:

  • Marketing and sales jointly describe the stages of the buying process and identify the characteristics of a "sales-ready lead."
  • The company implements some form of lead scoring system that will disclose when a lead has become sales ready. according to the agreed-upon definition.
  • Marketing and sales agree on the process for transferring a lead from marketing to sales. Some companies use a formal service level agreement that spells out what information marketing will provide to sales and what actions sales will take when a lead is transferred.
So, the traditional tactics used to improve marketing-sales alignment are primarily designed to optimize the "hand-off" of leads by marketing to sales. They deal with when the hand-off will occur and how it will be executed. The metaphor that's often used when discussing marketing-sales alignment is a relay race, where one of the critical steps is to pass the baton from marketing to sales at the right time, in the right way.

The "relay race" model of marketing-sales alignment isn't adequate to support an optimized demand generation system. As Scott Brinker eloquently wrote in a recent post at the Chief Marketing Technologist blog, the conventional methods for improving marketing-sales alignment weren't "so much a breakthrough in alignment as much as a negotiated peace settlement between two countries who share a common border. Trade policy and border control were established, facilitating commerce between them, but they were not one nation under a common flag."

The main weakness in the traditional paradigm of marketing-sales alignment is that it doesn't match up with how potential buyers actually engage with companies during the buying process. In essence, the current incarnation of marketing-sales alignment is an imperfect attempt to compensate for the inherent shortcomings of a bifurcated, two-function approach to B2B demand generation.

The diagram below shows why the current model of marketing-sales alignment is inadequate. The bottom portion of the diagram shows the B2B buying process developed by SiriusDecisions. The top portion depicts the two fundamental types of interactions that potential buyers have with companies during the buying process.

This diagram illustrates that, in general, today's buyers rely primarily on content-based interactions in the early stages of the buying process and primarily on person-to-person interactions during the later stages of the process. The use of content-based vs. person-to-person interactions at each stage of the buying process will vary from company to company, and even from lead to lead. The important point is that most potential buyers will use both types of interactions throughout the buying process.

Most companies rely on marketing to develop content and to handle content-based interactions, and they rely on sales reps to handle person-to-person interactions. So, our diagram also shows the involvement of marketing and sales during the buying process. The diagram illustrates that both content-based interactions and person-to-person interactions can occur at any stage of the buying process. Therefore, to optimize demand generation performance, both marketing and sales need to be involved at every stage of the process.

Recent research has confirmed the need for both marketing and sales to be involved throughout the buying process. At its summit conference last week, SiriusDecisions unveiled the results of its 2015 B-to-B Buying Study. This research was based on the behaviors of 1,000 business executives. The study found that business buyers are interacting with sales reps more than 50% of the time in the earlier stages of the buying process.

A truly optimized demand generation system requires the marketing and sales functions to be fully integrated. It's not enough to have a "peace settlement" that manages border control and trade relations. Today's buyers expect their potential suppliers to speak with one consistent voice, and they expect everyone they deal with in an organization to know what interactions have already occurred and what information has been exchanged. This type of combined effort requires integrated capabilities.

The architect Louis Sullivan once said that "form" should follow "function." Marketing and sales are interdependent components of the demand generation process. Therefore, they should be in the same organizational unit for management, planning, and budgetary purposes.

Combining marketing and sales into a single organizational unit is a controversial idea. Some people argue that the two functions should not be combined because marketers and salespeople perform different activities and have different skill sets. The facts in this argument are accurate, but the argument itself is not persuasive. Many companies have a manufacturing process that includes diverse work activities and requires employees with different skills. Yet, most of these companies manage manufacturing within a single organizational unit.

Others argue that if you combine marketing and sales, one of the functions will suffer because the executive managing the combined operation will favor one of the functions over the other. If this occurs - and I don't doubt that it has - it is a failure of leadership, not an inherent flaw of the combination itself.

The integration of marketing and sales is a touchy political issue, and there is still a significant amount of cultural and political baggage that separates the two functions. However, the logic for combining the two has become compelling, and it's clear that we cannot optimize demand generation performance if we continue to manage demand generation in two functional silos.

Monday, May 11, 2015

How Millennial B2B Buyers Make Purchase Decisions

For the past several years, the practice of B2B marketing has been changing in fundamental and profound ways. Digital technologies have transformed how business buyers access information and interact with peers, colleagues, and vendors. Easy access to abundant information has raised buyers' expectations and shifted power and control from sellers to buyers.

B2B marketing has already changed in significant ways, but it's likely that more changes are in store as marketers face the need to create meaningful engagement with new generations of business buyers. Today, older Baby Boomers are beginning to approach retirement, members of Generation X are in the prime of their careers, and Millennials are increasingly assuming positions of greater influence in B2B companies. Baby Boomer and Gen X buyers are digital immigrants who largely began using digital technologies in their everyday lives as adults. Millennial buyers, on the other hand, are digital natives who have been using digital technologies since they were children.

So, how will B2B marketers need to adapt their strategies and tactics to effectively connect with Millennial buyers? Recent research by the IBM Institute for Business Value provides important insights regarding how Millennials approach business decision making, how they prefer to perform the activities that are part of the B2B buying process, and what attributes they value in prospective vendors.

The IBM research was based on a survey of 704 individuals who influence or make B2B purchasing decisions of US$10,000 or more for their company. Respondents were from both large and small companies and were located in 12 countries. The IBM survey included respondents from three generational cohorts:

  • Millennials (born 1980-1993)
  • Gen X (born 1965-1979)
  • Baby Boomers (born 1954-1964)
The IBM study found significant differences among the generations when it comes to how they make business decisions. Millennial and Gen X buyers are less likely than Baby Boomers to make decisions in isolation. Fifty-four percent of Millennial respondents and 64% of Gen X respondents said they make better business decisions when they receive input from a variety of people. Only 49% of Baby Boomer respondents expressed a similar belief.
Somewhat surprisingly, the IBM research found that Millennials - far more than Gen X or Baby Boomer buyers - want to interact directly with vendors' representatives when they are researching products or services. When survey participants were asked what sources of information they are most likely to use when performing research, Millennial respondents ranked vendor's representatives first (out of nine possible choices), while Baby Boomer respondents ranked vendor reps fifth, and Gen X respondents ranked them seventh.
The IBM survey also revealed that B2B buyers from different generations have different priorities when it comes to the attributes they look for in prospective vendors. The table below shows how Millennial, Gen X, and Baby Boomer buyers responded when asked what vendor attributes are most important.

The IBM study contains several other important insights regarding the attitudes and preferences of Millennial, Gen X, and Baby Boomer buyers. We're now on the cusp of a generational shift in B2B buying. If you're a B2B marketer, you should take a close look at the IBM research.

Sunday, May 3, 2015

SAP Research Provides Insights on B2B Buyers

SAP recently commissioned a research study to gain insight regarding how the relationships between vendors and their customers and prospective customers are changing and to identify ways that vendors can differentiate themselves and ultimately win more sales. The SAP study was based on more than 1,200 interviews with business executives at primarily large and mid-size organizations located in ten countries worldwide. The interviewed executives had responsibility for purchasing goods and services ranging from technology to business services to office equipment.

The study report contains a wealth of data points regarding how business buyers are approaching purchase decisions and how they view the sales processes used by their prospective vendors.

Some of the key findings of the SAP study echo the results of other recent research regarding buyer behavior. For example:

  • Sixty-eight percent of the interviewed buyers said they don't need salespeople as much as they once did, and 91% said they have higher expectations of vendors and their sales reps that they did two years ago.
  • Sixty-eight percent said they have less time to deal with vendors, and 79% said that the ROI on products and services is generally under more scrutiny.
  • Sixty percent said they are generally less tolerant and trusting of salespeople now than they have been in the past.
When asked about their biggest frustration with vendors, 48% of the interviewed buyers said aggressive salespeople, 46% complained about sales reps who lack relevant knowledge about their needs, 44% identified unsolicited approaches, and 43% said too much contact or excessive persistence.
The interviewed buyers identified trust as the single most important factor in purchase decisions. Seventy-four percent said that demonstrating a high level of knowledge about products or services, and 52% said that understanding the buyer's organization are the most important building blocks of trust.
When business buyers were asked how vendors could improve the buying experience, the top three actions they identified were:
  • "Speed up the purchase process from start to finish" (48%)
  • "Provide a consistent experience regardless of the channel I choose" (47%)
  • "Enable me to communicate with vendors/suppliers via the channel I choose" (49%)
Some of the findings of the SAP research highlight the complexities of B2B buying and show why broad generalizations are usually problematic. For example, over two-thirds (68%) of the interviewed buyers said they are waiting longer to contact vendors because they are doing more research on their own, and an amazing 80% said they typically know exactly what they want before they contact a vendor. Yet, 54% also said that face-to-face meetings were their preferred way to communicate with a vendor when making a final buying decision.
These findings show that B2B marketers should keep two important factors in mind.
  • First, what you sell has a major impact on how you should structure and organize demand generation efforts. When the products or services you offer address issues or challenges that are well understood, and when those products or services are easy to understand, it's very likely that many of your prospective buyers will prefer a more "self-service" approach to buying. Complex or novel products or services, on the other hand, are likely to benefit from a more high-touch, person-to-person approach.
  • Today, B2B buyers will differ significantly in how they prefer to manage purchasing decisions and in how they prefer to interact with potential vendors. To maximize demand generation performance, B2B companies must be prepared to accommodate these diverse buyer preferences.