Sunday, January 26, 2020

What "Professional" B2B Buyers Want

For obvious reasons, B2B marketers have always craved insights about their current and potential buyers. Such insights can enable astute marketers to craft more compelling value propositions, run more effective marketing programs, and deliver better customer experiences.

Every year, I review several research studies that focus on the attitudes, preferences, and behaviors of B2B buyers. In most years, these studies address a diverse set of specific topics, as the following examples from 2019 illustrate:

Most of the published B2B buyer research focuses on "non-professional" buyers. By "non-professional," I mean individuals who do not work in their company's procurement/purchasing function. The research has given far less attention to the attributes and behaviors of individuals whose primary job responsibility is purchasing goods and services for their company, even though many B2B companies derive significant revenue from sales involving these "professional" buyers.

Late last year, PROS (a provider of dynamic pricing software) published a report that provides important insights about "professional" business buyers. What B2B Buyers Want was based on a survey of 1,053 "leaders in procurement and purchasing" that was conducted in association with Hanover Research. The objective of this survey was to capture insights about the current expectations of professional business buyers and identify what matters most to them.

Here is an overview of some of the major findings.

Most Professional Buyers Prefer Incumbent Suppliers

The buyers polled in this survey exhibited a strong preference for incumbent suppliers. Sixty percent of the survey respondents said they switch suppliers occasionally or less frequently (24% said rarely and 4% said never). This preference for incumbents isn't difficult to understand. First, switching suppliers requires time and effort. And second, buying from a new supplier can entail significant risk if the products or services involved are mission critical.

The preference for incumbent suppliers is not, however, unconditional. Buyers will remain loyal if they believe the prices they are paying a supplier are fair and reasonable given the current market conditions. In this study, nearly three-quarters of the survey respondents indicated that they are very or extremely confident they are paying fair prices. When the survey participants were asked what had caused them to switch suppliers, 39% said it was because of price increases, and 30% said it was because they found a cheaper supplier.

Professional Buyers Value Personalization

The buyers participating in this study want personalization if it helps them increase the value they obtain from a supplier. Ninety-two percent of the survey respondents said they desire personalized recommendations, and 69% strongly or somewhat agreed that personalized offers and recommendations enabled them to obtain more value from their suppliers.

A majority of the buyers in this research acknowledged that personalization can have real economic value. More than half of the survey respondents said they are willing to pay a higher price to receive personalized product and service recommendations.

Ecommerce Becomes Mainstream

The PROS research also found that professional B2B buyers are increasingly using digital channels for self-service purchasing.
  • Only 15% of the survey respondents said they were making the majority of their purchases online two years ago.
  • 30% said they are currently making the majority of their purchases online.
  • 44% said they expect to make the majority of their purchases online within two years.
This finding does not mean that professional business buyers see no value in person-to-person interactions. In fact, a majority of the survey respondents said they prefer talking with a sales representative in several circumstances. For example:
  • When products involve complex configurations - 61%
  • When asking about special prices - 61%
  • When inquiring about specific purchase terms - 58%
  • When learning about new products - 52%
The Takeaway
The findings of the PROS survey provide three important takeaways for B2B marketing and sales professionals:
  1. Professional business buyers are risk averse, so they prefer to work with trusted suppliers.
  2. They want personalization, so long as it provides pragmatic value.
  3. They are shifting more of their purchases to digital self-service channels, but they still want access to a human when facing more complex decisions and when learning about new products or services.
Image Source:  PROS Holdings, Inc.

Sunday, January 19, 2020

Three Critical Steps for Thought Leadership Success

It's now abundantly clear that compelling thought leadership content has become a vital component of effective marketing for most B2B companies. Numerous research studies have demonstrated that business buyers are relying on thought leadership content and that it has a significant impact on purchase decisions.

The 2020 B2B Thought Leadership Impact Study by Edelman Business Marketing and LinkedIn provides more convincing evidence that good thought leadership content has become essential for successful B2B marketing. This research involved a survey of 3,275 global business executives across a wide range of industries and company sizes.

The survey was fielded in September - October of last year, and respondents were drawn from the United States, the United Kingdom, Australia, France, Germany, India, and Singapore. Nearly 1,200 of the respondents were located in the United States.

The Edelman/LinkedIn study clearly shows the importance and value of compelling thought leadership content. For example:

  • Nearly half of the survey respondents (48%) said they spend at least one hour per week consuming thought leadership content, and 17% reported spending four hours or more per week.
  • 69% agreed that consuming thought leadership content is one of the best ways to get a sense of the caliber of an organization's thinking.
  • 48% said that thought leadership content had led them to award business to a company.
It's also clear, however, that thought leadership can be a double-edged sword. In the Edelman/LinkedIn survey, only 17% of the respondents rated the quality of the thought leadership content they consume as very good or excellent, while 28% rated the quality as mediocre or very poor. One in four of the respondents (25%) said that consuming a company's thought leadership content had directly led them not to award business to the company.
What Makes Thought Leadership Content Effective
Several research studies have identified the attributes that make thought leadership content persuasive. While the exact descriptions used in these studies vary somewhat, the research findings demonstrate that three attributes are critical.
  1. It must address a topic and provide information that is relevant and important to the target audience.
  2. It must provide information that is novel (not previously available).
  3. It must be authoritative (supported by credible evidence).
Laying the Foundation for Thought Leadership Success
Producing thought leadership content that will earn and keep the attention and respect of your target audiences is not an easy task, but there are three preliminary steps you can take to lay a sound foundation for your thought leadership effort.
Step 1:  Set high standards for your thought leadership content. Remember that thought leadership content must address subjects that are relevant and important to your target audience, it must provide novel information or insight, and it must be authoritative. Don't make compromises regarding these standards.
Step 2:  Be realistic about the volume of thought leadership content you can produce. Effective thought leadership content almost always requires original research, and original research takes time. Therefore, you need to set realistic goals for the amount of thought leadership content you will produce during any given period of time.
Step 3:  Before you start, conduct sufficient research to get a clear understanding of the "knowledge landscape" that's relevant for your business, and keep that understanding up to date. You can't identify topics that will be appropriate for thought leadership content until you know what subjects have already been addressed. To develop thought leadership content that is novel, you will usually want to avoid topics that have already been discussed. However, there are three notable exceptions to this general rule.
  • First, a broad topic may have been previously discussed, but specific aspects of the topic may not have been thoroughly covered. These particular aspects can be good subjects for thought leadership content if they are relevant and important to your customers and/or prospects.
  • Second, if a topic has not been addressed for a significant amount of time, it can be appropriate to take a fresh look at that topic.
  • And third, if a topic has already been addressed but the existing treatment is flawed or incomplete, that can be an appropriate subject for thought leadership content.
Obviously, these three steps are not all that's needed for a successful thought leadership program. You will also need to conduct any required original research, produce the thought leadership content resources, and implement activities to distribute and promote those resources. But these three preliminary steps will provide a solid foundation for an effective thought leadership effort.

Sunday, January 12, 2020

Moving Beyond Mere Sales-Marketing "Alignment"

In my last post, I discussed some of the findings of a 2019 survey about sales and marketing alignment by LeadMD and Drift. In this survey, over 90% of the respondents described their marketing and sales functions as well aligned or very well aligned. However, 60% of those respondents also reported that their company had not performed well in terms of revenue and pipeline growth.

This research also found a strong correlation between positive perceptions about the quality of sales-marketing alignment and the use of key performance indicators that are shared by marketing and sales. Ironically, the survey found that the mere existence of shared KPIs is sufficient to engender positive feelings about alignment. The survey report states, "It's critical to note that lack of achievement around these KPIs did not negatively influence alignment perceptions - the presence of the shared KPI was enough."

This finding helps explain why many companies have found it difficult to create the kind of sales-marketing relationship that will actually drive improved business outcomes. Many of the widely-touted "best practices" for improving sales-marketing alignment focus on three primary objectives:

  1. Creating a shared understanding among marketing and sales team members regarding the key elements of the company's go-to-market strategy, including the definition of the target market, the ideal customer profile, core value propositions, and customer buying processes;
  2. Establishing an agreed-upon lead management process ("who does what and when"); and
  3. Shared performance measures that collective show how well the company's revenue generation strategy and processes are performing.
These objectives are certainly important, but they aren't sufficient to create the kind of sales-marketing alignment that is needed to produce significant improvements in important business outcomes. In fact, the term "alignment" does not adequately capture the real sense of what is required. A better term for what is needed is operational integration. By operational integration, I mean that marketing and sales work as a single, cohesive team on a day-in, day-out basis, even though they are separate functions on the organizational chart.

From Alignment to Operational Integration
To move from conventional "alignment" to operational integration, sales and marketing leaders need to focus on two additional objectives.
Recognized Interdependence - The operational integration of sales and marketing requires a widespread recognition among both marketing and sales professionals that the two functions are now deeply interdependent. In other words, both marketing and sales professionals must recognize that they need each other, and that an integrated approach to revenue generation is essential for success.
Ongoing, Self-Directed Collaboration - Operational integration also requires marketing and sales professionals to work collaboratively on an ongoing basis, and this collaboration needs to occur naturally and spontaneously, at all levels of both functions, whenever and wherever it's needed. In other words, working collaboratively must become the normal way of getting things done.

How Leaders Nurture Operational Integration
Nurturing operational integration is primarily the responsibility of the chief marketing officer and the chief sales officer. The CEO must be supportive, but the CMO and the CSO must lead the effort on a day-to-day basis. In addition to implementing mechanisms designed to achieve the conventional alignment objectives, CMOs and CSOs need to take three other steps.
Reinforce the Narrative - The CMO and the CSO must constantly communicate the importance of having marketing and sales work together seamlessly - that the company's revenue generation efforts can't produce maximum results unless marketing and sales work as a cohesive team. In addition CMOs and CSOs should make it clear that informal, self-directed collaboration among marketing and sales professionals is not only acceptable, but expected. This narrative needs to be reinforced every day in some way.
Conduct Regular Sales-Marketing Forums - CMOs and CSOs should conduct joint sales-marketing forums on a regular basis. The cadence of these forums is determined by individual company needs, but they probably should occur at least monthly at most companies. The primary objective of these forums is to provide a venue for marketing and sales professionals at all levels to interact, exchange information, and discuss problems and opportunities.
Leverage Cross-Functional Teams - The CMO and the CSO should always be looking for opportunities to use cross-functional teams to deal with meaningful problems, challenges, or opportunities. Whenever possible, these teams should be composed of individuals who don't normally work together. Not only are cross-functional teams usually the best way to address major issues, they also foster the development of personal relationships that span functional and departmental boundaries.

The Bottom Line
Creating a high-performing revenue generation system is ultimately an exercise in team building. It's essential for marketing and sales professionals to have a shared understanding regarding the major elements of their company's go-to-market strategy. And they also need an agreed-upon lead management process, and a well-designed set of shared performance measures.
But these factors aren't sufficient to create the level of sales-marketing cohesiveness and coordination that are needed for high-performance revenue generation. In addition, marketing and sales leaders must nurture a "culture of collaboration" that transforms marketing and sales into a team of teams.

Image courtesy of Tatinauk via Flickr CC.

Sunday, January 5, 2020

Why Superficial Sales-Marketing Alignment Isn't Enough

Astute B2B marketing and sales professionals have long recognized the importance of having a productive relationship between marketing and sales, and many B2B companies have been working to build such relationships for more than a decade. So it's understandable that sales-marketing alignment has been a hot topic in B2B marketing and sales circles for the past several years.

Overall, there's no doubt that most companies have made at least some progress toward creating a more productive relationship between marketing and sales. It's also clear, however, that most companies still have work to do to turn their marketing and sales organizations into a cohesive, high-performing team.

A research report published late last year by LeadMD and Drift provides several important - and somewhat surprising - insights about the state of sales-marketing alignment, and about what business leaders need to do to reap the maximum benefits from a productive marketing and sales relationship.

The LeadMD Sales and Marketing Alignment Survey Benchmarking & Insights Report was based on a survey of 350 sales and marketing executives. Forty-four percent of the respondents were sales executives, 26% were marketing executives, and 30% were executives with responsibility for both functions. The respondents were drawn from several industries, and all were with companies having at least $25 million in annual revenue.

One primary objective of this study was to develop an evidence-based and actionable description of "meaningful" sales and marketing alignment. The researchers decided that alignment should be called meaningful if it is correlated with two business outcomes:

  1. Growth in revenue, wins, and lead quality over a 3-year period
  2. Pipeline health (growth and sustainability in predictable revenue)
The study report categorized survey participants as leaders or laggards in meaningful sales-marketing alignment based on how respondents answered survey questions related to these two business outcomes. The survey then identified what specific alignment actions distinguished the leaders from the laggards.

Perception Versus Reality
One remarkable finding from this survey is that perceptions about the quality of sales-marketing alignment are not strongly correlated with above-average business outcomes. Over 90% of the survey respondents said their sales and marketing functions are well aligned or very well aligned. However, 60% of those respondents also reported poor performance on the revenue growth and pipeline health outcomes.
The authors of the report attributed the positive feelings about alignment to two factors:
  1. The use of key performance indicators that are shared by sales and marketing. Ironically, the survey found that the mere existence of shared KPIs is enough - a lack of achievement around such KPIs did not negatively influence perceptions about alignment quality.
  2. Overall, the surveyed executives had positive feelings about both functions. In other words, sales and marketing leaders generally respect each other.
Keys to Meaningful Alignment
The LeadMD/Drift research identified two key attributes of companies that lead in meaningful sales-marketing alignment. First, leaders put greater emphasis than laggards on customer-focused KPIs, and they were more likely to have members of their marketing team interact directly with customers. The following table shows the differences between leaders and laggards on these issues:

The second distinguishing attribute of leaders is that they are more likely than laggards to take specific actions to foster ongoing collaboration between their marketing and sales teams, as the following table illustrates:

The Takeaway
The LeadMD/Drift study is a particularly valuable piece of research because it confirms that superficial sales-marketing alignment isn't sufficient to drive improved business performance. In my next post, I'll expand on the concepts found in this study and describe what marketing and sales leaders need to do to nurture sales-marketing alignment that is truly meaningful.

Top image courtesy of Ted Sakshaug via Flickr CC.

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