Why B2B Buying Cycles are Getting Longer

New research reveals what influences B2B buying decisions and explains why the B2B buying process is getting longer.

Earlier this month, Demand Gen Report published the findings of the 2017 B2B Buyer's Survey. The 2017 research was based on a survey of 283 C-level executives, VPs, and Directors across several B2B industries. Each respondent in this study was qualified to have been involved in a B2B purchase decision within the 12 months preceding the survey.

The 2017 survey findings reveal that B2B buyers' journeys are becoming longer and more complex. Fifty-eight percent of respondents said that the length of their purchase cycle had increased compared to a year earlier, while only 10% said that the length had decreased.

Other findings explain why the buying cycle has gotten longer.

• 52% of respondents said the number of buying group members had increased significantly.
• 77% agreed that they conduct a more detailed ROI analysis before making a purchase decision.
• 78% agreed that they "spend more time researching purchases."
• 75% agreed that they "use more sources to research and evaluate purchases."

The 2017 study also found that content continues to play a vital role in B2B buying decisions. When surveyed buyers were asked why they selected the winning vendor over others, 75% said that the winning vendor's content had a significant impact on their choice, and 89% said that the winning vendor "provided content that made it easier to show ROI and/or build a business case for the purchase."

The Demand Gen survey also asked participants to rate how important eleven factors became once they were at the point of evaluating a set list of possible vendors. The table below shows the percentage of respondents who rated each factor as very important.

Research regarding the attitudes and behaviors of business buyers can be extremely valuable to B2B marketing and sales professionals. However, it's always important to examine the details of any research study and ask how applicable the findings are to your business.

For example, the respondents to the Demand Gen survey represented a variety of industries and a mix of company sizes. However, more than half (53%) of the purchase decisions those respondents participated in involved computer software, and another 16% involved IT hardware. So, this study is particularly relevant for companies that sell software solutions and other technology products, but some of the specific findings may be less relevant if your company sells other types of products or services.

Top image source:  Demand Gen Report

Cracking the Code on Revenue Growth

Marketing leaders are increasingly on the hook for growth, and to meet this demand, they must understand how growth happens and where it originates. This post describes the wellsprings of revenue growth that any company can tap.

Today more than ever, marketing leaders are expected to develop strategies and execute programs that will drive revenue growth. In a 2016 global survey of 535 CEOs and 847 CMOs by Accenture Strategy, 50% of the CEOs said their CMO is primarily responsible for driving disruptive growth in their organization. CMOs were ranked ahead of all other C-level executives, including the CEO, the chief strategy officer, and the chief sales officer.

But this responsibility comes with a downside. About a third of the CEOs said the CMO is the first to go when growth targets aren't met.

Since marketing leaders are clearly on the growth hotseat, it's critical for them to understand the dynamics of revenue growth - how it happens or, more accurately, where it originates. There are, in fact, several distinct sources or wellsprings of revenue growth. These structural sources of growth are not dependent on the way a company is organized or on the types of products or services it sells. Instead, they are based on the business and marketing strategies that a company uses to tap into each source.

As you might expect, this topic has been discussed in management and marketing circles for a long time. In a 1957 article for the Harvard Business Review, Igor Ansoff identified four structural sources of revenue growth and four related types of growth strategies:

1. Sales of existing products in existing markets (market penetration strategy)
2. Sales of existing products in new markets (market development strategy)
3. Sales of new products in existing markets (product development strategy)
4. Sales of new products in new markets (diversification strategy)

In a 2004 article in the Harvard Business Review, Michael Treacy and Jim Sims identified five structural sources of revenue growth:

1. Continuing sales to existing customers (base retention)
2. Sales won from the competition (market share gain)
3. New sales in an expanding market (market positioning)
4. Sales from expanding into related markets (adjacent market expansion)
5. Sales from expanding into new, unrelated lines of business (diversification)

Both of these models are insightful, and I've used both when working with clients on business and marketing strategy projects to frame our discussions about how to grow. But over the years, I've expanded on these models to create a more detailed framework of the alternative ways to generate growth. The current version of my framework is depicted in the following diagram:

This framework can be a good tool for stimulating your thinking about how to grow your business. When using the framework, however, it's important to keep a couple of things in mind. First, no single source of growth is likely to provide all of the revenue you need to reach your growth objective. And second, you'll need a distinct game plan to extract the maximum volume of revenue for each source of revenue you choose to pursue.

Producing consistent revenue growth is always a difficult challenge. The good news is that these structural sources of growth are always present. Their existence isn't dependent on the market conditions a company is facing at a particular moment in time, although the volume of revenue that a company can get from each source is greatly influenced by the market and competitive environment. The job of business and marketing leaders is to combine these sources of growth to fit their unique situation.

Illustration courtesy of Paul Lancaster via Flickr CC.

Why Your Content Marketing Needs an Easy Button

Two recent surveys by Demand Gen Report highlight the importance of making it easy for potential buyers to find and access marketing content. Most B2B companies are already using content marketing in some form, so the challenge now is to make content marketing efforts as effective as possible. As it turns out, making content easier to find and access is an important key to content marketing effectiveness.

A successful content marketing program requires several components. Having high-quality content is obviously a given. In addition, it's important to have a sound and documented content marketing strategy, and it's necessary to support the content marketing effort with adequate human and financial resources.

In the drive to improve content marketing effectiveness, it's easy to focus on the "big" issues like content quality and content strategy, and to lose sight of some of the "basic" prerequisites of a successful content marketing program. One of those basic requirements is that content resources must be easy for potential buyers to find and access.

The 2017 Content Preferences Survey by Demand Gen Report shows why findability and easy access are so important. This survey produced 189 responses from buyers of B2B products and services.

The 2017 survey revealed that B2B buyers depend heavily on content to support buying decisions. Forty-seven percent of survey respondents said they were relying on content more than they did a year earlier. The survey also revealed that buyers are extremely busy and are feeling overwhelmed by the volume of content they encounter.

• Thirty-four percent of respondents strongly agreed that they had "less time to devote to reading/research" in the past year. That's up from 16% in the 2016 edition of the survey.
• Forty-six percent of respondents strongly agreed that they feel "overwhelmed by the amount of content available." That's up from 38% in 2016.

Given the abundance of available content, it's highly likely that time-constrained B2B buyers will gravitate to those companies that make it easy to find and access content resources.

Other research by Demand Gen Report shows that many marketers need to improve content findability and make access to content easier. Why Your Website Fails Buyers was based on a recent survey of 196 marketers, and it revealed that delivery of relevant content is a major issue for many companies.

In this survey, less than half (48%) of respondents said they house all of their customer-facing content in a centralized resource center, which would make content easier to find. Survey respondents acknowledged that it can be difficult for their prospects to locate and access relevant content. When asked to rate the accessibility of their content on a scale of 1 ("nearly impossible") to 5 ("extremely easy"), 59% of respondents rated accessibility at 3 or below.

Providing related content resources in "packages" makes it convenient for buyers to consume that content at their own pace. However, only 14% of respondents said they create packages of content assets that are aligned with the stages of the buying process. This represents a major disconnect with buyers because in the content preferences survey discussed earlier, 58% of surveyed buyers recommended that marketers package related content resources together.

The bottom line? B2B marketers need to make it as painless as possible for time-starved buyers to find and consume their content.

Image courtesy of Mike Mozart via Flickr CC.

How to Reinforce the Status Quo

In an earlier post, I explained why companies need different marketing content for customer acquisition vs. customer retention. Put simply, when the objective is customer acquisition, your content needs to weaken the grip of the status quo and convince your prospects to make a change. When the goal is customer retention, the exact opposite is true. You need to emphasize the attractiveness of the status quo so that your customers won't want to make a change.

The status quo occupies this central role because of the status quo bias, which can be defined as a cognitive bias that causes humans to prefer the status quo for non-rational reasons. In order to develop marketing content and messaging that will reinforce the status quo, we first need to understand what causes us to have a bias for the status quo.

What Causes the Status Quo Bias?

Psychologists demonstrated the existence of the status quo bias in numerous experiments beginning in the 1980's. Since then, several psychologists and behavioral economists have attempted to identify the specific underlying cause or causes of the bias. So far, the evidence suggests that the status quo bias is largely a result of 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 mental 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.

How to Reinforce the Status Quo

Your marketing content and messaging can reinforce the status quo in several ways:

• By documenting the benefits that the customer has already realized by acquiring and using your product or service, and communicating those benefits to the customer
• By identifying the future benefits that the customer can realize by continuing to use your solution
• By making the costs of switching to a different product or service visible and tangible to the customer
• By identifying the risks the customer will face if it switches to a different product or service
• By highlighting the difficulty and complexity of evaluating and selecting an alternative product or service

How to Make the Job Easier

The techniques described above can reinforce an attractive status quo, but they won't transform a bad status quo into a good one. Therefore, the key starting point for a successful customer retention effort is to provide customers - particularly new customers - information, insights, and assistance that will help them maximize the value they obtain from your solution and from their relationship with your company.

This approach - which is often called customer success management - has been widely adopted by software companies that offer their solutions on a subscription basis, and it is becoming more popular in other types of B2B companies, as business and marketing leaders increasingly recognize the value of long-term customer relationships. The bottom line is, it's much easier to reinforce the status quo when you have happy customers who are deriving great value from your solution.

Image courtesy of Nichole Burrows via Flickr CC.

Research Explains the Persistent Disconnect Between Sales and Marketing

Yesterday, I performed a Google search using the term "sales and marketing alignment." My search produced 239,000 results. When I limited the search to the past year, Google still returned over 50 pages of results. So clearly, sales and marketing alignment is still a hot topic in the B2B sales and marketing world.

Marketing and sales professionals have long recognized the importance of forging a more productive relationship between sales and marketing, and some companies have made progress in improving the quality of the marketing-sales relationship. It's also clear, however, that many companies have more work to do to turn their marketing and sales organizations into a cohesive, high-performing demand generation team.

Recent research by Altify helps explain why sales-marketing alignment is still challenging for so many companies. The Business Performance Benchmark Study 2017 was a global survey that produced 833 responses. Survey respondents represented a wide range of industry verticals and company sizes. The study also included respondents from a variety of business functions including sales, marketing, operations, IT, and customer service.

The Altify study addressed a broad range of issues, including the performance of marketing and sales. Altify reported some of the study results by the business function of respondents. In particular, the study report identifies how sales respondents and marketing respondents answered several questions. These responses highlight some of the troubling "disconnects" that still exists between sales and marketing.

Altify asked study participants if they agreed with a series of statements regarding sales and marketing performance. The table below shows the percentage of sales respondents and marketing respondents who agreed with seven of these statements. The table also shows the "gap" between sales and marketing that exists with respect to each statement.

These survey findings reveal attitudes that make the lack of effective teamwork between marketing and sales easy to understand. Only half of these sales respondents believe that their marketing team understands their customers, and just over half (54%) believe that marketing in their company is an effective investment of company resources. On the flip side, only about half (52%) of these marketing respondents believe that their sales team is effective at qualifying sales opportunities.

The extent of the disconnects shown in the table is surprising because 66% of the sales respondents and 71% of the marketing respondents in the study said that their sales and marketing organizations "work well together." One can only wonder what these study participants meant by "work well together."

As the above table shows, the disconnects between marketing and sales are still numerous and significant. So it shouldn't be surprising that many companies haven't achieved the level of cohesive teamwork between sales and marketing that's required for a high-performing demand generation system.

Top image courtesy of Tambako The Jaguar via Flickr CC.