Sunday, July 28, 2019
B2B purchases come in all shapes and sizes, and B2B buying decisions are made under a wide variety of circumstances. The context of a buying decision includes - among other things - the cost of the product or service, the complexity of the product or service, how familiar the buyers are with the product or service, the amount of internal change the purchase will require, and buyers' current or past experiences with a prospective vendor.
Collectively, these circumstances largely dictate the psychological factors that will influence buyers and the shape of their decision-making process. The result is, most B2B marketing and sales professionals must be ready to deal with multiple buying scenarios that usually call for different strategies, content, and messaging.
For example, acquiring a new customer presents marketers and sales reps a very different scenario than retaining an existing customer (at the current level or scope of business). And expanding your business with an existing customer presents a third scenario that has some elements of both customer acquisition and customer retention.
The Central Role of the Status Quo
Some marketing and sales pundits say that one vital key to success in all three of these scenarios lies in how marketers and sales reps address the status quo bias, which is typically defined as a cognitive bias that causes humans to prefer the status quo for non-rational reasons. If you think about it for even a few moments, it should become obvious that customer acquisition and customer retention call for dramatically different approaches for dealing with the status quo bias.
When your objective is to acquire new customers, the status quo is often your toughest competitor, and no sale can be made unless potential buyers first become willing to change their status quo. In this scenario, the first thing that marketing and sales content and messaging need to do is to weaken the grip of the status quo and convince prospects to make a change. Today, the most effective customer acquisition content and messaging uses disruptive insights to encourage prospective buyers to think differently about some aspects of their business.
The circumstances completely change with your objective is to retain existing customers. In this scenario, your company is the incumbent and part of the customer's status quo. Therefore, the first thing that marketing and sales content and messaging need to do is to reinforce the status quo bias and use it to your advantage.
Customer Expansion is More Complex
The situation becomes more complex when your objective is to expand your business with existing customers. As noted earlier, customer expansion scenarios usually have elements of both acquisition and retention. Therefore, marketing and sales content and messaging will need to reinforce some aspects of the status quo and weaken others.
Corporate Visions has developed a content and messaging framework for addressing customer expansion scenarios. The framework is based on research conducted by Corporate Visions in partnership with Dr. Nick Lee, Professor of Marketing at the Warwick Business School in the UK. The study consisted of a test simulation or "experiment" of the kind widely used in academic psychological research.
This research tested five types of customer expansion messaging, and one message type proved to be more effective than the other four across several performance dimensions. The framework of the willing message has five components that are used sequentially. The following table shows the five message components and how Corporate Visions describes each component:
As the table shows, the winning message is a "hybrid" that both reinforces and challenges the status quo. It begins by documenting the value of your relationship with the customer (part of the status quo). But from that point on, it emphasizes the need for change and the positive results that the right kind of change will produce.
The bottom line is, most B2B companies derive revenue from multiple buying scenarios, and the impact of the status quo is different in each scenario. Therefore, marketing and sales professionals need to develop and use content and messaging that embodies an approach to the status quo that's appropriate for each scenario.
Top image courtesy of Nichole Burrows via Flickr CC.
How to Persuade Prospects to Leave the Status Quo
How to Show Buyers That Inaction Has a Price
How to Reinforce the Status Quo
What to Do When the Status Quo is Your Friend
How to Weaken the Grip of the Status Quo
Sunday, July 21, 2019
A recent survey conducted by Econsultancy in partnership with Sojourn Solutions provides several valuable insights regarding the state of marketing operations (MOPS) at large and mid-size B2B companies.
The 2019 Marketing Operations Maturity Benchmarking Report was based on a survey of 171 senior executives at B2B companies with 2018 revenues of more than $250 million. Thirty-eight percent of the respondents reported 2018 revenues of more than $1 billion.
Sixty-three percent of the survey respondents were located in North America, and 32% were based in the U.K. All respondents were manager level or above, and all described themselves as either a member of their company's marketing operations team (45%) or very familiar with its operations (55%).
The objective of this research was to benchmark the performance of the marketing operations function along several dimensions and to identify what aspects of marketing operations companies are doing well, and where there is room for improvement.
Econsultancy broke survey respondents into two groups, and the survey report provides data for each of these groups. Top Performers were the respondents who reported that their marketing function exceeded it top business goal in 2018. Top Performers accounted for one-third of the total survey panel. The remaining two-thirds of the survey sample were called Mainstream respondents.
The differences between Top Performers and Mainstream respondents revealed by the survey results are both significant and consistent. The following table contains nine of the performance benchmarking statements Econsultancy included in the survey. The table also shows the percentage of Top Performers and Mainstream respondents who said that each statement was fully or mostly true for their marketing operations function.
As the table shows, there is a gap of at least 24 percentage points between Top Performers and Mainstream respondents on all nine of the performance benchmarks, and a gap of at least 31 percentage points on seven of the benchmarks.
Econsultancy captured the essence of the difference between Top Performers and Mainstream organizations in these terms:
"Relative to their mainstream peers, top performers are further along in the marketing operations evolution in every measure. This striking consistency reflects the interconnected nature of modern marketing; few disciplines within MOPS can exist independently. Top performers are far more likely to have reached a point of marketing-led change, effective implementation or cultural acceptance across a variety of measures."
The Econsultancy survey provides several interesting insights about the maturity of MOPS at B2B companies, but there are a couple of things to keep in mind about this research. First, the survey only produced 171 total responses, which means that the Top Performers group contained fewer than 60 respondents. We should be cautious about giving a great deal of weight to data derived from such a small survey sample.
My second point relates to how Econsultancy divided the survey panel for analysis and reporting purposes. As I indicated earlier, Econsultancy classified respondents who reported that their marketing function had exceeded its top business goal in 2018 as Top Performers. This group represented about one-third of the total respondents. Econsultancy classified the remaining two-thirds of the respondents as Mainstream.
About one-third (35%) of the total respondents reported that their marketing function had met its top business goal in 2018. These respondents were included in the Mainstream group along with those who said their marketing function had not achieved is top 2018 business goal.
I wish Econsultancy had divided these respondents into separate groups for reporting purposes because that would have provided a good picture of the attributes of "average" performers. I suspect that the gaps between the "average performers" and the Top Performers would be narrower, while the gaps between the Top Performers and the laggard group (those who missed their top 2018 goal) would be even wider.
Top image courtesy of Personal Creations via Flickr CC.
Sunday, July 14, 2019
Demand Gen Report recently published the findings of its eighth annual B2B Buyers Survey. The 2019 survey received responses from more than 250 B2B executives representing a variety of industry verticals. Fifty-four percent of the respondents said they predominantly made software/technology purchases. Another 19% said they primarily purchase IT hardware. So about three-fourths (73%) of the respondents were involved in purchasing some type of technology. Virtually all of the respondents were manager-level or above.
The 2019 research shows a continuation of trends that appeared in earlier editions of the buyers survey. For example, a majority of survey respondents have been reporting that the length of their buying cycle is increasing for at least the past four years, as the following table shows:
Demand Gen Report presented the survey panels with several statements describing various aspects of their purchasing process. The following table shows the percentages of respondents in the 2019 and 2018 surveys who said they strongly agreed with five of these statements:
The 2019 survey indicates that a growing number of buyers have become more willing to engage with vendor reps early in their buying process. For example:
- 42% of the respondents said they spoke to and engaged with vendor reps in the first month of their buying process (up from 33% in the 2018 edition of the survey).
- 33% said they accepted outreach from prospective vendors for calls and demos in the first month (up from 23% in 2018).
- 25% said they asked for RFx's, competitive bids, or pricing information in the first month (up from 20% in 2018).
Demand Gen Report also asked survey participants about several factors that distinguished winning vendors from others. The following table shows the percentages of respondents in the 2019 survey who rated six characteristics of winning vendors as very important:
The 2019 B2B Buyers Survey provides important insights regarding the attitudes and behaviors of business buyers, but it's important to recognize that this research doesn't really cover the entire spectrum of B2B buying. The first sentence of the survey report makes this clear when it says: "Over the course of eight years, Demand Gen Report's annual B2B Buyers Survey has spotlighted the ever-changing needs and expectations of the different stakeholders in complex purchasing decisions." (Emphasis added)
The Demand Gen Report survey, like most of the published research about B2B demand generation, deals with "high consideration" purchases that feature large buying groups, complex decision-making processes, and long buying cycles. But high consideration purchases have never represented all B2B buying.
Many B2B purchases are fairly routine, where the buying decision is made quickly by a small group of people, or even a single individual. In a 2018 survey of 114 "industrial buyers" by Thomas, over half (56%) of the respondents said they make buying decisions in less than one month.
While not much recent data is available, it's likely that more routine purchases account for a significant part of total B2B buying. In a landmark study of more than 3,000 B2B buyers conducted in 2009 by Enquiro, survey respondents estimated that 50% of their budget was spent on "Repeat" purchases - low-risk purchases that are made frequently and involve familiar products or services.
The reality is, most B2B companies derive revenue from multiple types of buying scenarios, and these scenarios will differ in significant ways. Understanding how these scenarios differ and what causes the differences is important because they call for different marketing and sales strategies. I'll provide a framework for analyzing buying situations in a future post.
Top image courtesy of ITU Pictures via Flickr CC.
Top image courtesy of ITU Pictures via Flickr CC.
Sunday, July 7, 2019
Last month, McKinsey & Company published an article that discussed the evolving role of marketing - particularly the role of the CMO - in driving business growth. Marketing's moment is now: The C-suite partnership to deliver on growth was based in part on a 2019 study that included interviews with 60 C-level executives and quantitative surveys with another 200.
In the McKinsey study, 83% of global CEOs said that marketing can be a major driver of business growth. However, 23% of the CEOs do not believe that their marketing organization is delivering on the growth agenda. Other C-level executives are even more skeptical. For example, only half of the CFOs surveyed by McKinsey said that marketing delivers on the promise of driving growth.
The central theme of the article is that "a marketing organization's ability to drive growth depends heavily on the strength of the partnerships the CMO can forge across the organization."
Three CMO Archetypes
The authors of the article contend that CMOs fall into one of three categories.
Unifiers - Unifier CMOs are very good at developing cross-functional partnerships with other C-level executives. They speak the language of their C-suite peers and possess a results-oriented mindset. Unifier CMOs often play an important role in developing the company's strategy. McKinsey estimates that about 24% of CMOs are Unifiers.
Loners - Loner CMOs are often capable marketers, but they don't typically have close relationships with their C-suite peers. These CMOs usually focus on tactical marketing activities, and they aren't likely to be involved in designing the company's business strategy. McKinsey estimates that about 27% of CMOs are Loners.
Friends - According to McKinsey, about half (49%) of CMOs are Friends, and these CMOs fall somewhere between Unifiers and Loners. A Friend CMO may have a solid relationship with the CEO and may be responsible for driving growth through normal marketing channels and tactics, but they usually haven't extended their sphere of influence across the organization.
According to McKinsey's analysis, high-growth companies are seven times more likely to have a Unifier CMO than a Loner.
Where Unifier CMOs Excel
The McKinsey consultants wrote that Unifier CMOs excel in four areas that enable them to effectively drive growth:
- They ensure that the CEO fully understands how marketing is driving growth and contributing to the company's overall goals and objectives, and they leverage the CEO's support to extend marketing's influence over growth-related activities across the entire organization.
- They win support from the CFO by using metrics and analytics to quantitatively demonstrate how marketing impacts growth and business value.
- They work collaboratively with the CIO or CTO to leverage data to better understand customers, personalize interactions, and predict customer behavior.
- They work with the head of human resources to ensure that marketing can acquire, develop, and retain the human talent that is necessary to support marketing's growth responsibilities.
The McKinsey article embodies a theme that I've seen discussed with increasing frequency over the past couple of years. A growing number of marketers and other business leaders are recognizing that no one department or business function can single-handedly deliver great end-to-end customer experiences or drive maximum business growth.
Both great end-to-end customer experiences and maximum growth require the efforts of multiple business functions across the organization that are aligned around a common business strategy and are working in a collaborative and coordinated way. McKinsey says that the CMO should be primarily responsible for driving business growth, and this view has also been advanced by Deloitte and Forrester.
But there are alternative approaches to managing growth. Over the past few years, many companies (mostly B2C firms) have appointed chief growth officers to lead and coordinate growth efforts. In 2017, Culture App, an employee engagement and analytics software firm, reported that 455 U.S. companies have chief growth officers. That number is almost certainly higher now.
Meanwhile, many B2B companies - particularly technology start-ups and those operating in the SaaS software space - have been appointing chief revenue officers who are tasked with managing the company's revenue-related business functions including marketing, sales/business development, direct outside sales, channel management, and customer success/ customer support.
I suspect that we will continue to see all of these approaches used as CEOs try to identify the best way to drive and manage growth.
Image courtesy of ccpixs.com (Creative Commons License).