Sunday, July 26, 2015

Why Media Consumption Statistics Shouldn't Drive Marketing Investments

In May of this year, Mary Meeker, now an executive with the venture capital firm Kleiner Perkins Cauflield & Byers, published the twentieth edition of her Internet trends report. Ms. Meeker's annual dissertation has become one of the most highly-acclaimed and widely-distributed reports regarding the major trends in Internet growth and usage.

Ms. Meeker's report is filled with interesting statistics, and I recommend that you take the time to read it. You can obtain a copy of the report here.

As she did in some earlier versions of her report, Ms. Meeker included a slide in the 2015 edition that compared the time people spend consuming various types of media with the amount of advertising spending devoted to those media channels. The 2015 slide is shown below.

Source:  Mary Meeker, Internet Trends 2015

As in past years, this slide has provoked a significant amount of commentary in advertising and marketing circles. For example:

  • "Meeker showed a nearly identical slide last year, comparing the amount of time people spend with various forms of media to the percentage of advertising spend dedicated to each type of media. Radio seems pretty well calibrated, while print is still grabbing a disproportionate percentage and mobile has room to grow by about $25 billion." (Emphasis added) ("The Nine Top Slides From Mary Meeker's State of the Internet," Advertising Age, May 27, 2015)
  • "The mobile ad industry is still short $25 billion. Mobile commands 24 percent of time spent with media but accounts for only 8 percent of ad dollars spend." ("These Are the Digital Trends Everyone in Tech and Advertising Needs to Know According to Mary Meeker's Internet report," Adweek, May 27, 2015)
The implicit assumption in these statements is that advertising and marketing spending should reflect media consumption patterns. If you accept this assumption, Ms. Meeker's data does suggest that companies are over-investing in print advertising and under-investing in mobile.
But are high-level media consumption statistics a reliable guide for how companies should spend their advertising and marketing dollars? I contend that marketers should be cautious when using media consumption data for three reasons.
Lack of Specificity
Broad consumption patterns usually aren't specific enough to provide effective guidance for an individual company. As a marketer, what you really need to know is how the prospective buyers in your target market consume media.
Narrow Focus
Most statistics on this issue focus only on what is called measured media, and therefore they only compare advertising spending to media consumption time. Numerous research studies have shown that spending on digital marketing, content marketing, and social media marketing has increased dramatically over the past few years. Today, the important issue for marketers is how to allocate overall marketing spending, of which pure advertising spending is only one component.
Time Spent Doesn't Mean Effectiveness
The time people spend with a particular type of media isn't necessarily indicative of how effective that channel will be for marketing purposes. For example, many younger B2B buyers are probably spending a considerable amount of time using mobile devices, but that isn't necessarily their preferred way to access business-related information - at least not yet. The fallacy is to assume that personal communication preferences and marketing communication preferences are identical.
The report describing the findings of the 2012 Channel Preferences Survey by ExactTarget made this point clearly:  "The lesson here for marketers is that just because consumers embrace a channel for personal communications doesn't mean that they want to receive direct marketing messages from your brand via that channel."
Media consumption statistics are interesting, and they can be useful, but you need to know more to make sound marketing investments.

Sunday, July 19, 2015

Customer Experience is the New Competitive Battleground in B2B

One of the most widely-discussed topics in marketing circles over the past few years has been the growing importance of providing outstanding customer experiences and managing customer experiences effectively. Forrester Research says that businesses of all kinds are now operating in the "age of the customer" and that this new competitive environment places new demands on company leaders, particularly marketers.

There's a growing recognition among marketing thought leaders and practitioners that customer experience is quickly becoming a new basis of competition for B2B companies and a primary driver of competitive advantage. For example:

  • Recent research by Gartner found that 89% of companies expect to compete mostly on the basis of customer experience by 2016.
  • In the 2015 Digital Trends report by Econsultancy and Adobe, 22% of surveyed business professionals said that customer experience represents the single most exciting opportunity this year, up from 20% in the 2014 edition of the survey.
We're also beginning to see evidence that providing great customer experiences contributes to superior financial performance. For example, in its 2014 Customer Experience ROI Study, Watermark Consulting found that from 2007 through 2013, customer experience leaders generated a total return that was 26 percentage points higher than the S&P 500 Index (77.7% vs. 51.5%). Over the same period, customer experience laggards posted a negative total return of -2.5%.

A recent survey by Regalix Research provides additional important insights regarding the state of customer experience management in B2B companies. The Regalix survey clearly revealed that B2B marketers recognize the importance of effective customer experience management. Eighty-six percent of survey respondents said that delivering superior customer experiences is extremely critical to their company's growth, and 81% said that providing good customer experiences is a strategic priority. 

Respondents also recognized, however, that they have more work to do to achieve their customer experience goals. Only 58% said that their company's approach to customer experience management is "highly focused."

The marketers surveyed by Regalix also identified several challenges to effective customer experience management. For example:
  • Only 23% of the respondents said that the attributes of their company's brand are well defined.
  • Only 28% said that employees across their organization fully understood the key attributes of their company's brand.
  • Only 21% said that the quality of interactions with target customers is closely monitored.
Effective customer experience management requires the involvement of virtually every business function in a company. However, I suggest that marketing is the most appropriate function to take the lead in a company's customer experience management efforts.

Sunday, July 12, 2015

How to Combat the Status Quo Bias

The most formidable competitor faced by B2B marketing and sales professionals is not usually a company that provides an alternative product or service, but rather the processes or solutions that their prospects are already using, i.e. the status quo. Most companies record a "loss" to the status quo as a no decision, and research shows that no decisions are a prominent feature in the B2B demand generation landscape.

The 2015 Sales Performance Optimization survey by CSO Insights revealed that between 20% and 28% of forecast deals result in no decision. Note that these percentages refer to forecast deals - sales opportunities that were sufficiently "mature" to be included in revenue projections for a specific fiscal period. Taking a broader view, Sales Benchmark Index has estimated that 58% of the typical sales pipeline will stall or result in no decision.

Of course, some no decisions are completely rational. In some cases, the prospect's existing solution or process may be objectively superior (or at least equivalent) to the proposed alternative. Or, a change in a company's leadership team may cause a shift in organizational priorities. Frequently, however, a prospect's decision not to make a purchase can't be explained on a rational basis. When this occurs, it is usually the result of the status quo bias - a powerful cognitive bias that causes humans to prefer the status quo for non-rational reasons.

Psychologists demonstrated the existence of the status quo bias in numerous experiments beginning in the late 1980's. Since that time, several psychologists and behavioral economists have attempted to identify the underlying cause or causes of the bias. So far, the evidence suggests that the status quo bias is caused by other biases in human decision making. For example:

  • Daniel Kahneman argues that the status quo bias is related to loss aversion. He contends that most people make the status quo their reference point and tend to view change from the status quo as a loss. Because we perceive and weigh losses greater than potential gains, we become loss averse, which makes us inclined to stay with the status quo.
  • Richard Thaler has argued that the status quo bias results from a psychological phenomenon called the endowment effect, which refers to the fact that most people like and value something more simply because they already own it. The endowment effect causes us to overvalue the benefits of the status quo and to under-appreciate its disadvantages.
  • Some psychologists have attributed the status quo bias to a human desire to avoid or delay difficult or complicated choices, and there is evidence showing that people are more likely to stick with the status quo when the alternatives are difficult to evaluate or compare.
So how can marketing and sales professionals combat the status quo bias? Because the status quo bias is inherently non-rational, there are no silver-bullet solutions. But here are a few approaches that are often effective.
  • As I wrote in an earlier post, one effective tactic is to frame the status quo as a loss that is immediate, significant, and, most importantly, certain. This taps into our human psychological desire to avoid losses, particularly those that are certain.
  • Marketing and sales professionals should also frame their proposed solution as a low-risk alternative to the status quo. This helps to neutralize the risk that potential buyers inevitably associate with making a change.
  • Finally, make sure that your content includes examples of people and/or organizations who have successfully adopted your alternative and derived significant benefits as a result of that decision.  As humans, we crave consensus when we're faced with a decision to change, and we're more likely to change when we see that others like us have made a similar choice.

Sunday, July 5, 2015

B2B Buyers Say Interactive Content Is More Effective

DemandGen Report recently published the findings of its 2015 Content Preferences Survey. DemandGen has been conducting this survey annually since 2012, and it has always provided interesting insights regarding the content consumption behaviors and preferences of B2B buyers.

About two-thirds (67%) of the respondents in the 2015 survey said they are relying more on content now to support purchase decisions than they did a year ago. At the same time, almost three-quarters (74%) of the respondents said they have less time to view content now than they did a year ago. It's likely, therefore, that business buyers will be forced to become more selective about the content they consume.

Several findings in the 2015 survey echo the results of research by other firms, and some reinforce the findings of earlier DemandGen content preferences surveys. For example:

  • White papers, webinars, e-books, and case studies remain the most widely-consumed types of B2B content.
  • Forty-five percent of the survey respondents said they typically view three to five pieces of content before they talk with a salesperson, and another 22% said they consume five to seven pieces of content before they engage with a sales rep.
  • An overwhelming majority of survey respondents want their prospective vendors to use more research and insights from industry thought leaders and analysts in their content, package related pieces of content together, and curb the sales messages in their content.
Some of the most interesting findings in the 2015 survey related to interactive content. DemandGen asked survey participants whether they had consumed and how much they valued three types of interactive content - interactive presentations, ROI calculators, and assessments. The survey revealed a significant gap between how much interactive content is consumed and how highly such content is valued.
  • Only 31% of respondents said they had accessed interactive presentations in the previous twelve months, but 45% of respondents rated the value of interactive presentations a four or five on a scale of five.
  • Only 23% of respondents had used ROI calculators in the past year, but 42% gave them a value rating of four or five.
  • Twenty-four percent of respondents had accessed an assessment tool during the past year, but 40% placed a high value on this content type.
The value of interactive content is now clear. A 2014 survey by Demand Metric found that interactive content outperforms passive content at three critical marketing functions - producing prospect conversions, educating the buyer, and creating differentiation from competitors.
In the Demand Metric survey, 70% of interactive content users said their content was moderately or very effective at converting prospects, while only 36% of passive content users gave such ratings to their content. Ninety-three percent of interactive content users said their content was somewhat or very effective and educating buyers, but only 70% of passive content users reported the same level of effectiveness. Eighty-eight percent of interactive content users said that interactive content is somewhat or very effective at creating differentiation, while only 55% of passive content users gave such ratings to their content.
The explosive proliferation of marketing content makes it more difficult for B2B marketers to create content that will rise above the clutter. The DemandGen Report and Demand Metric surveys show that one way to address this challenge is to make your content more interactive.