Our Most Popular Posts of 2019

This will be my last post of 2019, and I want to thank everyone who has spent some of his or her valuable time reading this blog. My goal for this blog has always been to provide content that readers will find informative, thought-provoking, and useful, and I've been immensely gratified by the attention and engagement this blog has received.

For the past several years, I've used my last post of the year to share which posts have been most widely read. For this list, I'm only considering posts that were published in 2019. I've ranked the posts based on cumulative total reads, so posts published early in the year have an advantage.

So in case you missed any of them, here are our five most popular posts for 2019:

1. Have Marketers Fully Embraced the Growth Challenge?
2. Both Market and Customer Expertise are Needed to Drive Growth
3. Three Ways to Make Your Case Studies More Persuasive
4. A Fresh Look at Millennial B2B Buyers
5. How to Identify Revenue Growth Opportunities

Happy New Year, everyone!

Image courtesy of Republic of Korea via Flickr CC.

Four Keys to Strong Customer Relationships

A recent report by Accenture Interactive provides several interesting insights on both the fragility of B2B seller-buyer relationships and what B2B companies need to do to strengthen long-term customer relationships. Service is the new sales was based on interviews with 748 business buyers and 1,499 B2B sellers across 10 countries and 16 industries.

All of the study respondents were directly involved in (or had oversight of) their company's buying or selling strategy or processes. About 75% of the respondents were manager-level or above, and about 25% were C-level. All the companies represented in the research had annual revenues of at least $25 million.

Accenture's report opens with some rather disconcerting statistics. The research found that 44% of B2B buyers had switched sellers in the 12 months preceding the study. The percentage was even higher among buyers who made weekly B2B purchases. Sixty-two percent of those study respondents said they had switched sellers in the previous 12 months. Another 36% of these frequent buyers said they plan to switch sellers in the coming 12 months.

When Accenture asked buyers why they had switched (or plan to switch), the three top reasons - each identified by 25% of the study respondents - were:

• Uncompetitive pricing
• Long lead times for delivery/fulfillment
• Missed delivery dates

This finding indicates that business buyers are a pragmatic group, and it suggests that, before anything else, B2B sellers need to be sure they are getting the basics right.

On a more positive note, half of the buyers interviewed by Accenture said they had increased their average number of items per purchase and grown average purchase values with those sellers who met their needs and helped them succeed.

The Accenture research also sought to identify important attributes and behaviors of B2B "leaders," as compared with "laggards." The report does not provide a precise definition of "leaders" and "laggards," but it does describe how Accenture made the distinction:

"To discern the leaders from the laggards, we weighted responses to 12 questions from the sellers' survey across three key pillars of B2B transformation:  organizational strategy, activities, and infrastructure. To give a robust and accurate picture of the global state of buyer-seller relationships, greatest weighting was given to questions reflecting the objective and measurable elements of B2B sales and service."

With this "definition" in mind, here are some of the major differences between leaders and laggards that the Accenture report highlights.

Personalization - Leaders were twice as likely as laggards to track buyer behavior and more likely to make personalized offers based on "the sum of all behaviors." The Accenture study found that leaders consistently offered greater personalization at all stages of the customer journey.

Digital and Human Interactions - Laggards tended to prioritize digital sales channels over channels with a human touch. Leaders, on the other hand, emphasized interaction channels that provide a dialogue with buyers. This includes digital channels such as chatbots and traditional sales reps and call centers.

Organizational Commitment - Leaders were more likely than laggards to view customer experience as an ongoing work-in-progress rather than as a one-time effort. Seventy percent of leaders said that providing good service and experiences had been a top or high priority in their company for at least three years.

Functional Integration - Forty-eight percent of leaders said they had fully integrated marketing functions across channels, compared to only 19% of laggards. Leaders were also more likely than laggards to have partially or fully integrated their sales and marketing teams.

The Accenture report also highlighted the benefits of being in the leader category. Ninety-seven percent of the leader respondents said they had gained market share, 96% reported higher profitability, and 90% said they had won a greater share of their customers' wallets.

This research also confirmed the importance of blending digital and human-to-human interactions to build and sustain strong customer relationships.

Image Source:  Accenture Interactive

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Think "Close and Deep" to Maximize Growth

During the Cold War, U.S. Army leaders in Europe faced a disconcerting situation. Their mission was to defend NATO member nations in the event of an attack by the Soviet-led Warsaw Pact. The problem was, U.S./NATO ground forces were greatly outnumbered. During this period, Soviet army doctrine was to throw wave after wave of forces at defenders until they were overcome, and U.S. military leaders weren't confident they could win that kind of war.

To address this problem, the U.S. Army developed a warfighting doctrine that reintroduced the idea of depth to the battlefield. Under this doctrine, U.S./NATO forces would extend the battlefield deep on the enemy's side of the front lines and attack rear-echelon forces, while simultaneously engaging front-line forces. The objective was to break up the enemy's momentum and deplete enemy forces before they can get into the main fight. The principle of fighting close and deep at the same time remains a basic tenet of U.S. Army operational doctrine.

Some of you may be wondering what this brief foray into military history has to do with revenue growth. Quite a bit, actually. To generate consistent revenue growth over an extended period of time, business and marketing leaders must design and execute their activities so as to maximize performance in the present (fighting close), while simultaneously investing in activities and capabilities that will lay the foundation for success in the future (fighting deep).

In many ways, this challenge comes down to a question of resource allocation. Regardless of company size, the available resources are rarely sufficient to enable senior business leaders to do everything they'd like to do. Therefore, resource allocation is an intrinsic part of every significant business decision, and the challenge for senior company leaders is to spend their finite resources on those activities and capabilities that will produce maximum results.

Deciding where and how to invest finite business resources has never been simple or easy, but these decisions have become more complex because today's business leaders have more options and more factors to consider then ever before. Resource allocation decisions are made even more complicated by the need to address both current and longer-term needs. As Jack Welch, the former Chairman and CEO of GE once said, "You've got to eat while you dream. You've got to deliver on short-term commitments, while you develop a long-range strategy and vision and execute it."

Fortunately, there's a good rule of thumb called the "70-20-10 rule" that business leaders can use to address the current vs. future aspect of the resource allocation challenge. The 70-20-10 rule has been used for a variety of business purposes. For example, Google has reportedly used it to manage the innovation process, and Coca Cola has reportedly used a version of the rule to guide marketing investment decisions.

Below is a brief overview of how the 70-20-10 rule can be used to guide resource allocation decisions in marketing. Keep in mind, though, that the rule can also be used for several other kinds of resource allocation decisions.

The 70%

The marketing version of the 70-20-10 rule says that about 70% of your marketing resources should be devoted to capabilities and programs with a proven 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 on 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.

The primary goal of these capabilities and programs is to drive incremental performance improvements in the present and over the near-term future.

The 20%

According to the 70-20-10 rule, about 20% of your marketing resources should be invested in "new" but promising capabilities and techniques. This category would 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 resources 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 or capabilities - e.g. sending members of the marketing team to conferences or other educational events. Larger companies may also decide to launch small pilot programs to experiment with a new capability or technique.

Caveats

As with other rules of thumb, marketers should view the 70-20-10 rule as a general 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 and thus increases the odds of successfully producing consistent revenue growth.

Image courtesy of winnifredxoxo via Flickr CC.

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How to Address the Growth Challenge

How to Identify Revenue Growth Opportunities

Driving consistent, profitable revenue growth is one of the most persistent challenges that business and marketing leaders face. The key word in that sentence is "consistent." Many companies can produce substantial revenue growth sporadically or over a short period of time. But it's exceptionally difficult to consistently generate above-average growth over the long term.

In my last post, I wrote that business and marketing leaders must perform two distinct but related tasks to maximize revenue growth:

1. They must identify what growth opportunities are (or can be) available to them and determine which of those growth opportunities are most attractive.
2. They must find the right balance between short-term and long-term growth opportunities.

In this post, I'll focus on how business and marketing leaders can identify growth opportunities. I'll cover balancing short-term and long-term opportunities in my next post.

Structural Sources of Growth

The first step in identifying potential growth opportunities is to understand the dynamics of revenue growth - how it happens or, more accurately, where it originates. There are, in fact, several distinct sources of growth. These structural sources of growth are not dependent on how a company is organized or 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.

This topic has been discussed in management and marketing literature for a long time. In a 1957 article for the Harvard Business Review, Igor Ansoff identified four structural sources of 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 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)

I've used both of these models when working with clients 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 shown in the diagram at the top of this post.

This framework is a good tool for stimulating your thinking about how to grow your business and for identifying the growth opportunities that are (or can be) available to your business. When using this framework, it's important to keep several things in mind.

First, the good news is that these structural sources of growth are always present, at least to some degree. Their existence isn't dependent on the market conditions a company is facing at a particular moment in time. However, the volume of revenue that a company can obtain from each source is greatly influenced by the market and competitive environment. So the framework identifies potential sources of revenue growth, but it doesn't tell you about the relative attractiveness of those sources. To perform that evaluation, you'll need to use traditional market and competitive analysis tools and techniques.

Second, no single source of growth is likely to provide all the revenue you need to reach your growth objective.

And third, each source of growth has distinctive attributes and dynamics. So you'll need a specific strategy and game plan for each source of growth you choose to pursue.

In my next post, I'll discuss the importance of balancing short-term and long-term growth opportunities.

How to Address the Growth Challenge

Growth is to a business organization what oxygen is to a living organism. It is the life force of the organization. For decades, sustained profitable growth has been the linchpin of long-term business prosperity. Profitable growth creates a virtuous cycle of forces that supports and drives business success. When a company stops growing, these same forces begin to run in reverse, creating a vicious cycle that makes success difficult to achieve.

My first post of 2019 asked the question:  "Have Marketers Fully Embraced the Growth Challenge?" Back in January, I answered that question this way:

"The recent research indicates that leading business growth is more of an aspirational goal than a current reality for most marketers. Overall, the studies show that most marketing leaders are still relying on conventional marketing communications tools to drive growth, and they remain much less involved in other business activities that have a significant impact on growth."

Research published this year indicates that my conclusion is still largely accurate. For example, in the February 2019 edition of The CMO Survey, respondents identified driving growth as the top challenge for marketing leaders. Yet only 43.4% of the respondents reported that the marketing function leads revenue growth in their organization. In the August 2019 edition of the survey, the percentage of respondents saying that marketing leads revenue growth dropped to 36.0%.

(Note:  The CMO Survey began asking this question in August 2016. Since then, the percentage of respondents reporting that marketing leads revenue growth has ranged from a low of 29.0% to a high of 43.4%.)

This fall, the CMO Council published a strategic brief that discussed the importance of growth and the major issues surrounding growth. The brief also discussed some steps that companies need to take to successfully address the growth imperative.

How to Achieve Transformational Growth described the issues surrounding growth in emphatic terms:

"For many companies, growth is the driving force that brings it all together. Yet questions loom:  Where do you find it? How do you inspire it? What hinders it? How do you invest in it? Who within the organization orchestrates and owns it?"

The CMO Council observed that many companies are addressing the growth challenge by creating new C-level positions to lead growth initiatives. The brief noted that:

• According to research by Singular, more than 21% of brands with at least $50 million in advertising spend now have chief growth officers (CGOs).
• More than 6,000 executives profiled on LinkedIn have the CGO title.
• 15,000 executives on LinkedIn report being the chief revenue officer (CRO) for their company.
• 28,000 of the executives say they are chief commercial officers (CCOs).

The CMO Council discusses three keys to maximizing growth:

1. Align the functional areas of the organization that play critical roles in driving growth. This will include marketing, sales, product, customer experience, technology, and analytics.
2. Create a growth culture. Nurture inclusiveness and encourage input from all organizational levels.
3. Set a growth agenda that identifies attractive growth opportunities and builds a sound strategy for exploiting those opportunities.

Regardless of whether growth is led by the CEO, CMO, CGO, CRO, or CCO, companies face two distinct but related tasks when addressing the growth challenge. First, they need to identify what growth opportunities are (or can be) available to them and which of those opportunities are most attractive. And second, they need to balance short-term and long-term growth opportunities.

I'll be discussing both of these issues in upcoming posts.

Image courtesy of Mike Lawrence (CreditDebitPro.com) via Flickr CC.