Sunday, February 25, 2018

Use the 70-20-10 Formula for Better B2B Marketing

The most important and difficult decisions that marketing leaders must make inevitably involve the allocation of marketing resources (money, people, time, etc.).

Regardless of company size, the resources available for marketing are rarely sufficient to enable marketing leaders to do everything they'd like to do. Therefore, resource allocation is an intrinsic part of every significant marketing decision, and the challenge for marketing leaders is to use their finite resources for programs and capabilities that will produce maximum results.

Deciding where and how to invest limited marketing resources has never been simple or easy, but these decisions have become more complex and challenging because today's marketing leaders have more options than ever before. Over the past several years, the number of marketing channels and techniques has grown dramatically, and the explosive proliferation of marketing technologies has been well documented.

Marketing investment decisions are further complicated by the need to maximize performance in the present, while simultaneously laying the foundation for success in the future. Because customer expectations and preferences are constantly evolving, marketing techniques that are highly effective today may become less effective in the future, while marketing techniques and capabilities that aren't very important today may become key to future marketing success.

Fortunately, there's a good rule of thumb called the 70-20-10 rule that marketers can use to address this particular aspect of the resource allocation challenge. The 70-20-10 rule is used for a variety of business purposes. Many companies, including Google, use it to manage innovation resources. Coca Cola has reportedly used a version of the rule for years to guide marketing investment decisions. Here's how the rule works.

The 70%

The marketing version of the 70-20-10 rule states that about 70% of your marketing budget should be spent on capabilities and programs with a well-established track record of acceptable performance. These will include marketing channels, techniques, and technologies that your company is currently using successfully.

The 70-20-10 rule does not mean that companies should simply "keep doing what we're already doing." It means that marketers should evaluate how well their "bread and butter" programs are performing and continue to invest in those that are delivering acceptable results.

Your primary goal with these capabilities and programs is to drive incremental performance improvements.

The 20%

According to the 70-20-10 rule, about 20% of your marketing budget should be invested in "new," but promising capabilities and techniques. This category will typically include channels and techniques that a growing number of other companies are using successfully. In many cases, these channels and techniques will be approaching mainstream adoption.

Investments in this category are not quite as safe as those in the 70% group, but they often relate to capabilities or technologies that will become critical to your success in the near-term future.

The 10%

The remaining 10% of your marketing budget should be invested in truly new capabilities and techniques that have just emerged on the scene. Obviously, these are high-risk investments that aren't likely to produce short-term benefits.

For small and mid-size companies, the investments in this category may consist primarily of learning about the new techniques of capabilities - e.g. sending members of the marketing team to conferences or other educational events. Larger companies may also decide to launch small pilot projects to experiment with a new capability or technique.


As with other rules of thumb, marketers should view the 70-20-10 rule as a guide rather than a precise prescription. The specific percentages in the rule may not be appropriate for every business in every competitive situation. The benefit of the rule is that it leads marketers to give appropriate consideration to both current and future needs.

Image courtesy of Vall d'Hebron Institut de Recerca VHIR via Flickr CC.

Sunday, February 18, 2018

Why Brand Building Still Matters in B2B

Most of you have probably heard the story about the inebriated man who had lost the keys to his house and was searching for them under a street light. A police officer comes over and asks what he's doing. "I'm looking for my keys," the man says. He points to a spot about twenty feet away and says, "I lost them over there." The police officer looks puzzled and asks, "Then why are you looking for them all the way over here?" The man replies, "Because the light is so much better over here."

For the past several years, marketers have been focused on measuring the performance of marketing tactics, channels, and programs, and many marketing leaders are now using performance data to allocate budgets. Overall, this has been a positive development. Using performance data to guide marketing investments can lead to more rational, evidenced-based decisions.

But, there's also a potential dark side to the current fixation on marketing performance metrics. The problem arises when marketers conflate ease of measurement with value, and choose marketing tactics based primarily on how easy they are to measure. Some marketers seem to believe that if an activity can't be easily measured, it's not worth doing.

Making ease of measurement the primary basis for using (or not using) a marketing technique is both short-sighted and dangerous. It's a classic example of the McNamara Fallacy, which social scientist Daniel Yankelovich described as follows:

"The first step is to measure whatever can easily be measured. This is OK as far as it goes. The second step is to disregard that which can't be easily measured or to give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what can't be easily measured really isn't important. This is blindness."

Brand marketing has been particularly susceptible to this way of thinking in the B2B space. Some marketing pundits have asserted that brand marketing is no longer important for most B2B companies and that new marketing techniques have made B2B branding largely obsolete.

It is more challenging to measure the impact of some brand marketing programs, but research has consistently shown that a strong brand creates significant value for many B2B companies. A 2017 analysis by TechTarget provides persuasive evidence that effective brand marketing can boost marketing performance. This analysis covered 1,675 branding campaigns run on the TechTarget network from 2015 to 2017.

The TechTarget analysis found that consistent brand advertisers increased consideration performance by 25%, sporadic advertisers improved consideration by 10%, and non-advertisers saw consideration decline by 10%-15%. TechTarget also found that when companies ran simultaneous brand advertising and demand generation e-mail programs targeting the same potential buyers, e-mail click-through rates were 22% higher compared to e-mail only programs. Equally important, targeted brand advertising improved funnel conversion rates (lead to MQL to SQL) by 25%.

Research by CEB has also shown the value of building a strong brand. In a 2013 study, CEB compared the behaviors of high brand consideration customers with those of no brand consideration customers. High brand consideration customers were those who gave brands high scores for trust, image, and industry leadership. The CEB study found that high brand consideration 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 price premium
The techniques used for brand marketing have certainly evolved over the past several years. Today, the creation and publication of compelling thought leadership content will be the most effective way to build the brand for many B2B companies. Recent research has shown that great thought leadership content will have a positive impact on buyers at every stage of the buying process. The tactics may have changed, but brand building is still a critical marketing function for many B2B companies.

Image courtesy of EdgeThreeSixty via Flickr CC.

Sunday, February 4, 2018

Does Your Content Create the Right Kind of Halo?

If you've ever sold a house, you've probably heard about curb appeal. Curb appeal is the visual attractiveness of a house as seen from the street, and it is what creates the first impression of a house in the minds of potential buyers. Real estate professionals know that curb appeal plays a huge role in determining how quickly a house will sell and what its selling price will be.

Good first impressions are also critical for successful B2B marketing. And today, most of your potential buyers will base their first impression of your company on the content you produce. If your content fails to create a good first impression, a potential buyer will quickly look elsewhere, and you may not get another chance to create engagement with that buyer.

On the other hand, when your content creates a good first impression, a potential buyer is more likely to "come back for more" and to be more willing to engage further with your company. Equally important, when one of your content resources creates a good first impression, a potential buyer will be more inclined to view the rest of your content - and your company - favorably.

That's because of a powerful cognitive bias known as the halo effect. The halo effect can be defined as the transfer of positive (or negative) feelings about one thing to another, without having a rational basis for the transfer. The critical thing to remember about the halo effect is that it magnifies the impact of a first impression beyond what would be justified on a purely rational basis.

The halo effect can be found in a wide range of human judgments. For example:

  • If I meet a person who is likable and well-spoken, I will be inclined to believe that the person is also generous and ethical even though I actually know nothing about the person's generosity or ethics.
  • If I have a good experience with a Honda automobile, I'll be inclined to believe that I would also be happy with a Honda lawnmower even though I actually know nothing about the quality of Honda lawnmowers.
  • If I read an e-book or a white paper produced by your company and find it to be useful and valuable, I'll be inclined to believe that the other content produced by your company will also be useful and valuable, and I'll be inclined to believe that your company is good at what it does even though I know little or nothing about your company.
Daniel Kahneman, a winner of the Nobel Prize for economics, shared a first-hand experience with the halo effect in his best-selling book Thinking, Fast and Slow. Kahneman wrote that when he was a young professor, he graded essay exams by reading all of the essays written by each student in immediate succession, grading them as he went. When finished, he would compute the overall final grade and move on to the next student.
Kahneman eventually noticed that his evaluations of each student's essays were usually similar. He began to suspect that his grading exhibited a halo effect and that the first essay he read had a disproportionate effect on each student's overall grade. In essence, if he gave a high score to the first essay, he was likely to be more lenient in scoring the rest of the essays.
So, if a student had written two essays - one strong and one weak - Kahneman would award different final grades, depending on which essay he read first. As Kahneman wrote, "I had told the students that the two essays had equal weight, but that was not true:  the first one had a much greater impact on the final grade than the second."
As a B2B marketer, it's important to recognize that every content resource you publish will produce a halo effect - either good or bad - if it constitutes the first interaction that a potential buyer has with your company. So you can benefit from the halo effect if you consistently produce valuable and credible content that creates a great first impression with potential buyers.
Image courtesy of Michael Dougherty via Flickr CC.