Sunday, July 31, 2022

What Causes "No Decisions" - And What To Do About Them

At some time in our lives, most of us have experienced anxiety when we're faced with a major decision. In most cases, the level of our anxiousness is proportional to the potential ramifications of the decision we are facing. When the stakes are high enough, we can easily be tempted to avoid making a decision at all.

This phenomenon can affect both personal and business decisions. Many B2B companies track their sales performance by categorizing the outcomes of potential deals as wins, losses or no decisions. Typically, no decision is a catch-all category used for those potential deals that are neither successfully closed nor lost to a competitor.

Several research studies have shown that B2B companies lose more sales to no decisions than to competitors. For example, a recent large-scale study by Matthew Dixon and Ted McKenna found that between 40% and 60% of prospective sales result in no decision. In many cases, a potential customer will go through a thorough buying process, but ultimately fail to make a purchase.

Rational No Decisions

Some no decisions are entirely rational. For example, a prospect may decide not to make a purchase because their current solution is objectively superior (or at least nearly equivalent) to the proposed alternatives. In such cases, the proposed alternatives don't provide enough value to justify making a change. Or, a downturn in the financial condition of a prospective customer can result in the implementation of cost controls that effectively take the proposed purchase off the table.

The Status Quo Bias

Frequently, however, a prospect's decision not to make a purchase can't be explained on a rational basis. In such cases, psychologists and behavioral economists attribute the no decision to the status quo bias, a powerful cognitive bias that causes humans to prefer the status quo for non-rational reasons.

Psychologists demonstrated the existence of the status quo bias in the late 1980's. and since then, behavioral scientists have been attempting to identify the underlying cause or causes of the bias. The current thinking is that the status quo bias is probably caused by other biases in human decision making.

Daniel Kahneman has argued that the status quo bias is closely related to loss aversion. Loss aversion is the human tendency to prefer avoiding loses to acquiring equivalent gains.

Research by Kahneman and Amos Tversky in the 1970's showed that, for humans, the pain of a loss is psychologically twice as intense as the pleasure felt from an equivalent gain. Because of this effect, most people are risk averse, and they will tend to avoid making a decision that involves a risk of loss even when the decision could result in substantial gains.

Kahneman contends that most people make the status quo their reference point and tend to view change from the status quo as a loss, which makes them inclined to prefer the status quo.

Richard Thaler has argued that the status quo bias is closely related to a cognitive bias called the endowment effect. This bias refers to the fact that most people like and value something more simply because they already own it. The endowment effect can cause us to overvalue the benefits of the status quo and to under-appreciate its disadvantages.

Customer Indecision Also Drives No Decisions

While the status quo bias is an important cause of no decisions, recent research indicates that it isn't the only or most significant cause.

In an article published last month at the Harvard Business Review website, Matthew Dixon and Ted McKenna wrote that their research had shown that 56% of no decisions were caused by the inability of prospective customers to make buying decisions - what they called customer indecision - while only 44% resulted from a preference for the status quo. This research also found that 87% of sales opportunities contained moderate or high levels of customer indecision.

Dixon and McKenna argued that overcoming customer indecision requires a different "playbook" than the one used to overcome the status quo bias. As they wrote, "Where overcoming the status quo is about dialing up the fear of not purchasing, overcoming indecision is about dialing down the fear of purchasing."

The authors' research found that top performing sales reps use four distinct behaviors - which they call the JOLT Method - to overcome customer indecision.

  • "Judge the level of customer indecision" - Top sales reps assess the level of customer indecision that exists in every sales opportunity and qualify opportunities based on those assessments.
  • "Offer their recommendations" - The most successful sales reps will - at the appropriate point in the sales process - recommend what the prospective customer should buy.
  • "Limit the exploration" - Top performing sales reps recognize that prospective customers can easily become overloaded with information and that the result of information overload is often "analysis paralysis." Therefore, they use information selectively to guide prospective customers to the best decision possible.
  • "Take risk off the table" - High-performing sales reps offer prospective customers "safety nets" that reduce the risks associated with making a purchase.
Marketers Must Also Focus on Customer Indecision
While Dixon and McKenna focused on how sales reps can reduce customer indecision, it's important to recognize that marketing also has an important role to play in helping potential buyers feel confident enough to make a purchase decision.
Buyer decision confidence has three major components.
  1. Confidence in the specific product or service under consideration
  2. Confidence in their company's ability to successfully implement any organizational changes required to reap the full benefits of the product or service purchased
  3. Confidence in the soundness of the process used to make the purchase decision
Because business buyers are increasingly relying on content to support their evaluation of potential purchases, B2B marketers should develop content resources that will nurture all three components of buyer decision confidence. For a closer look at the importance of buyer decision confidence and how marketers can nurture it, see this earlier post.
Dixon and McKenna have also written a book that provides a much deeper discussion of the issues covered in the HBR article. The Jolt Effect:  How High Performers Overcome Customer Indecision will be released in September. I've pre-ordered a copy, and I plan to review the book this fall.

Image courtesy of Dan Moyle via Flickr (CC).

Sunday, July 24, 2022

Research Reveals Some of the Nuances of Purpose Marketing

Source:  Shutterstock

In January of this year, I published a lengthy article here discussing the topic of purpose marketing, which can be defined as the use of content in external communications that emphasizes a company's core mission and values, i.e. its brand purpose.

A company's brand purpose describes its "reason for being" beyond the basic business functions of offering products or services and earning a profit. The brand purpose encompasses how the company is making a positive contribution to society and where the company stands on important social issues.

For the past few years, marketers have been inundated by research studies purporting to prove that consumers and business buyers now place great importance on the social responsibility track record of the companies they do business with. Many of these studies also indicate that buyers now expect companies and brands to "take a stand" on important social issues. As a result, many marketers have become enamored with purpose marketing.

As I wrote back in January, the decision to use purpose marketing is far more nuanced than the current tsunami of hype would suggest. Fortunately, three recent surveys provide a more balanced view of consumer attitudes regarding the importance of corporate social responsibility and brand purpose. The findings of these surveys show that while values matter to consumers, their expectations of companies and brands are mixed.

The Collage Group Survey

Last fall, Collage Group surveyed 4,140 American adults (ages 18-75) regarding a wide range of issues. The data presented in the survey report were weighted to be nationally representative of race/ethnicity, Hispanic acculturation, age, gender and sexuality.

The Collage Group survey revealed little consensus among American consumers regarding the proper role of companies and brands in social issues. Only 30% of the survey respondents said companies/brands should always focus on social and political issues. Another 28% said they should only focus on those issues that are related to their products or services. And 42% of the respondents said companies/brands need to stay out of social and political issues.

Not surprisingly, younger consumers are more likely to believe that companies/brands should always focus on social and political issues. The following table shows how survey responses varied across four generational cohorts.

The YouGov Survey

Recent research has also provided insights regarding how much importance consumers place on brand values when making purchase decisions. In August of last year, YouGov surveyed consumers in 17 global markets. The researchers asked survey participants whether they prioritized price or brand values when making purchases in eight industry verticals. The following table shows how the survey participants responded.

As this table shows, more consumers prioritize prioritize price than prioritize a brand's values when making purchases in all eight industry sectors.

The Merkle Survey

When it comes to consumers' expectations of companies/brands regarding social responsibility, it shouldn't be surprising that consumers place more importance on some actions than others. In an October 2021 survey of 1,000 U.S. consumers by Merkle, researchers provided survey participants a list of eight actions and asked participants to rate the importance of those actions. The following table* shows the percentage of survey respondents who rated each action as very important

As the above table shows, the members of this survey panel were most concerned about how companies treat their employees. The only two actions a majority of survey respondents deemed very important were treat employees fairly and keep workers safe. It's also noteworthy that only 16% of the survey respondents said it is very important for companies/brands to take a stand on political issues.  

The Takeaway

The findings of these three surveys do not demonstrate - or even suggest - that purpose marketing is a bad idea. But they do show that the decision to make purpose marketing part of your marketing strategy isn't as clear cut or simple as the current hype would suggest.

*The data in the table is based on a description of the Merkle survey results contained in a report by eMarketer titled, "Spotlight:  What Values-Driven Consumers Really Want."

Sunday, July 17, 2022

[Research Round-Up] NetLine Report Examines B2B Content Consumption

 (This month's Research Round-Up is devoted exclusively to the latest B2B content consumption report from NetLine Corporation. NetLine publishes this report annually, and it consistently provides a wealth of real-world insights regarding how business professionals actually consume content.)

Source:  NetLine Corporation
Over the past two decades, content marketing has become one of the most widely used techniques in B2B marketing. Today, virtually all B2B companies are using content marketing in some form.

Ironically, the popularity of content marketing has make successful content marketing more difficult to achieve. As companies produce more and more content, the total volume of content available to potential buyers increases exponentially. And so does competition for buyer attention and mindshare.

In these circumstances, understanding how business professionals actually consume content is critical to success. The 2022 State of B2B Content Consumption & Demand Report by NetLine Corporation provides numerous valuable insights on this vital issue.

NetLine operates a content syndication platform, and this report is based on data about 4.6 million content registrations that occurred on the NetLine platform in 2021. This research is particularly valuable for two reasons:

  1. It captures the real-world content consumption behaviors of business professionals. The data used for the NetLine report was not derived from a survey or interviews, but from actual engagements with B2B content.
  2. The report is based on first party data. The business professionals who use the NetLine platform voluntarily share information about themselves and the organizations they work for in exchange for access to the content resources available on the  platform.
NetLine tracks content consumption for more than 400 job functions, 24 industries and organization size. Therefore, the NetLine report produces a wealth of detailed information about content consumption behaviors, and I encourage you to review the full 65-page report. Here are a few of the report's highlights.
Content Consumption Continues to Grow
Overall B2B content consumption in 2021 increased more than 9% compared to 2020 levels. Last year's growth followed a 22% increase in 2020 compared to 2019. So overall consumption was up 33% in 2021 compared to 2019. Content consumption by C-level executives is also on the rise, growing by 15.8% in 2021 compared to 2020. In 2021, C-level executives represented 14.8% of NetLine's total audience.
Most Popular Content Formats
The ten most requested types of content on NetLine's platform in 2021 were:
  1. eBooks
  2. Guides
  3. Cheat Sheets
  4. Tips and Tricks Guides
  5. White Papers
  6. Research Reports
  7. Kits
  8. Webinars
  9. Checklists
  10. Articles
Collectively, these ten content formats accounted for 87% of all content registrations on the NetLine platform last year. The three most popular formats - eBooks, guides and cheat sheets - accounted for more than 60% of total registrations in 2021, and eBooks alone accounted for more than 43% of total registrations.
Measuring the Consumption Gap
One of the most useful insights provided by the NetLine report relates to the consumption gap, which NetLine defines as the time between the moment content is requested and the moment it's opened for consumption. This data point is important because it should be used to guide the timing of follow-up contacts with potential buyers. After all, it makes little sense to contact a potential buyer about a content resource before he or she has actually reviewed the content.
In 2021, the average consumption gap across all job categories was 33.3 hours, up from 29.7 hours in 2020.
eBooks vs. White Papers
NetLine's data regarding eBooks and white papers illustrate why marketers must consider multiple factors when evaluating the performance of content assets. As noted earlier, eBooks accounted for just over 43% of all content registrations on NetLine's platform last year. Meanwhile, white papers represented only 7.41% of all content registrations.
Clearly, eBooks are far more popular overall with business professionals than white papers, and marketers might be tempted to stop producing white papers based on this data. However, NetLine's analysis also found that business professionals who registered to access white papers were more likely than other registrants to be expecting to make a purchase in the following 12 months.
Therefore, the consumption of white papers is a strong indicator that a potential buyer is actively "in-market" and expects to make a purchase in the relatively near future. NetLine found that on-demand webinars and live webcasts were also good indicators of short-term purchase intent.
Beyond functioning as a good indicator of purchase intent, white papers and other more "weighty" content formats play an important role in the later stages of the buying process. As potential buyers more further into their buying process, they tend to seek more detailed information, and information-rich content resources such as white papers fill this need.
Content marketing is a vital part of the marketing strategy at most B2B companies, and the NetLine report provides data that marketers can leverage to improve the performance of their content marketing efforts.

Sunday, July 10, 2022

[Book Review] "The Right Way To Select Technology"

Source:  Rosenfeld Media, LLC

It's been crystal clear now for several years that marketing and technology have become deeply entwined, and that the number of marketing-related technologies has been growing at an exponential rate. The inaugural (2011) version of Scott Brinker's marketing technology landscape graphic contained about 150 solution providers. The 2022 version of the graphic includes nearly 10,000 technology solutions. So, the marketing technology landscape has grown by an astounding 6,521% since 2011. 

Because of the growing reliance on technology, marketing leaders are acquiring new technology tools on a fairly regular basis. In a 2021 survey of marketers by MarTech, two-thirds (67%) of the survey respondents said their organization had replaced at least one marketing technology application in the previous 12 months.

There are an abundance of resources that provide advice on how to select new technology. For example, many technology vendors produce buying guides for the types of technologies they offer, and several analyst/consulting firms regularly publish "rankings" of various types of technology applications.

One of the best resources for marketers is The Right Way To Select Technology by Tony Byrne and Jarrod Gingras (Rosenfeld Media, LLC, 2017). Tony Byrne is the founder and Jarrod Gingras is the Managing Director of Real Story Group, a buy-side technology research and advisory firm. It works exclusively with enterprise customers, and the firm emphasizes that its advice is vendor agnostic.

The Right Way To Select Technology provides a detailed road map for making sound technology buying decisions, and it contains a wealth of practical suggestions and tips. The book focuses primarily on information technologies that an enterprise acquires to improve customer or employee digital experiences. However, the authors note that the methodology described in the book can be used for selecting any information technology.

What's In the Book

The Right Way To Select Technology contains six major parts.

Part I (Chapters 1-3) - In Part I, the authors discuss the "business foundations" that are essential for making smart technology buying decisions. They argue that a realistic business case is needed for prospective technology acquisitions, they describe the importance of choosing an appropriate selection team, and they explain why the selection team needs to determine how decisions will be made before the selection process begins.

Part II (Chapters 4-6) - Part II of the book focuses on how companies identify the business needs and articulate the "requirements" associated with a proposed technology purchase. In Chapters 4 and 5, the authors introduce the idea of using principles of user-centered design in the technology selection process, and they argue that user stories should be a core component of the process. Chapter 6 outlines the kinds of questions that the selection team should be asking prospective vendors.

Part III (Chapters 7-9) - In this part, Byrne and Gingras describe how technology selection teams can ensure they identify the right vendors to consider, and they explain how companies can decide which solicitation vehicle (request for information vs. request for proposal vs. request for quote) will work best for their situation.

Part IV (Chapters 10-12) - Chapters 10 and 11 discuss how selection teams can interact effectively with prospective vendors, including how to create RFI's/RFP's/RFQ's that actually work and how to respond to vendor questions. Chapter 12 explains how selection teams should review vendor submissions and how they should approach the task of reducing the number of vendors under consideration.

Part V (Chapters 13-14) - In this part, Byrne and Gingras cover two of the most important steps in the technology selection process. In Chapter 13, the authors describe how to structure and conduct demo sessions that will provide the selection team relevant and useful information. Byrne and Gingras strongly argue that selection teams should include a competitive proof of concept - a "bake-off" - in their selection process. A bake-off would typically involve two vendor finalists. Chapter 14 explains how to design and conduct an effective bake-off.

Part VI (Chapters 15-17) - The book concludes with chapters that explain now to effectively negotiate with vendors, how to make the final selection, and how to adapt the process described in the book when selecting a services firm such as a consulting firm or a systems integrator.

My Take

The Right Way To Select Technology is a must-read for anyone who is responsible for acquiring information technology solutions for their organization. The book is well organized and clearly written, and it covers the technology selection process in a comprehensive and practical way.

The central theme of the book is that the most important goal of business leaders and managers in any technology selection process is to identify the vendor and solution that will be the "best fit" for their organization.

The emphasis on choosing best-fit technologies is present in virtually all of the steps of the selection process described in the book, but it plays the starring role in how the authors approach expressing the requirements for a new technology tool.

Byrne and Gingras recommend capturing requirements primarily through user stories. A user story is a short, real-world narrative that describes a company's available data, work processes, business needs and desired business outcomes.

A user story speaks from the perspective of a specific user persona, which can be defined as an archetype of a type or group of users. Users will always include certain company employees, but for some types of technologies, users could also include customers, suppliers and/or channel partners.

User stories enable the technology selection team to capture how real people will interact with a technology application and what they need to accomplish.

Selecting the right technology tools is now one of the most important responsibilities of business leaders, including marketing leaders. That's what makes The Right Way To Select Technology a valuable resource and a must-read.