Why It's Time to Rethink Personalization

The value of personalization in marketing has been largely unquestioned for nearly two decades. Today, most marketers view personalization as essential for success, and many companies have made personalization a top priority. But the marketing environment is changing, and that means it's time for marketers to rethink their personalization strategy.

In a report published last November, the research firm Gartner predicted that by 2021, one-third of marketers will reduce spending on personalization, and by 2025, 80% of marketers who have invested in personalization will abandon their efforts due to lack of ROI, the perils of data management, or both. These predictions were both surprising and controversial because they run counter to most of the current conventional wisdom about personalization.

While I doubt that eight out of ten marketers will completely abandon personalization over the next five years, it is clear that marketers are already facing a personalization conundrum. On one hand, numerous studies conducted over the past several years have reported that consumers and business buyers want - and are willing to provide personal information in order to receive - personalized offers, messages, and experiences.

But a growing number of studies also show that consumers and business buyers don't always welcome personalized marketing and will react strongly when they perceive that personalization goes too far. In one recent study, for example, 38% of survey respondents said they would stop doing business with a company that sent them "creepy" personalized messages.

Most marketing pundits and many marketing leaders argue that the key to increasing the effectiveness of personalized marketing is more personalization. They contend that marketers should collect and use more data about customers and prospects, make personalization more specific, and use it more frequently, in more channels, and for more types of interactions. The popularity of this view explains why hyper-personalization and personalization at scale have recently attained buzzword status.

The "more personalization" argument is based on the idea that increased personalization will produce more relevant messages and experiences, and that the increased relevance will make those messages and experiences more compelling. The fundamental flaw of this approach is that it fails to account for a significant shift in public attitudes toward personalization that's occurred over the past few years.

The Shadow of Cambridge Analytica

Since the Facebook-Cambridge Analytica scandal became public knowledge a few years ago, we have been bombarded with media coverage about how companies collect and use our personal information. Facebook's data privacy policies and practices have been widely, strongly, and repeatedly criticized, but other large tech firms such as Alphabet/Google have also been the subject of multiple media stories and Congressional hearings.

All of this has made the public more acutely aware of how much personal data companies are collecting and how they are using that data to target and personalize advertisements and other marketing communications.

Note:  The data practices of large technology companies have also been addressed by several highly-respected scholars. If you'd like to see an example of these discussions, get a copy of The Age of Surveillance Capitalism by Shoshana Zuboff. Dr. Zuboff is the Charles Edward Wilson Professor emerita at the Harvard Business School. Her book is thorough and sobering - if somewhat strident - but at over 700 pages, it is not a quick or easy read.

The heightened public awareness is impacting personalization in two ways. First, as members of the public have become more knowledgeable about how companies are using personalization in marketing, they have become desensitized to its effects. They no longer see personalized messages or content as extraordinary. So, many of the more widely-used personalization tactics and methods make less of an impact today than they did in the past. As the old saying goes, "Familiarity breeds contempt."

More importantly, as the public has learned more about how companies are collecting and using personal information, they have also become more disturbed about those practices. Today, when someone receives a personalized message, he or she is likely to think first about what enabled the personalization. What does this company know about me? How did the company obtain that information?

The conundrum facing marketers is clear. Most consumers and business buyers say they want and value personalized offers, messages, and experiences. At the same time, however, both consumers and business buyers are becoming more concerned about privacy, and they are increasingly distrustful about how companies are obtaining and using their personal information.

Under these circumstances, the "more personalization" strategy may do more harm that good. So, what's the alternative? I'll discuss that in my next post.

Image courtesy of Phil Wolff via Flickr CC.

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Unconventional Views on B2B Growth

Last fall, The B2B Institute (a think tank funded by LinkedIn) published a research report that every B2B marketer should read. The 5 Principles Of Growth In B2B Marketing describes the findings of research conducted by Les Binet and Peter Field, two highly-regarded, UK-based experts on advertising effectiveness.

This report is based on an analysis of data contained in the IPA (Institute of Practitioners in Advertising) Databank. The IPA is a trade organization representing the UK advertising industry, and the Databank includes extensive data submitted for the IPA effectiveness awards competition. This database includes information about almost 1,500 advertising and marketing campaigns.

In this report, Binet and Field discuss five principles of B2B growth and effective advertising. Most of these principles embody views that run counter to much of the current conventional wisdom about how B2B marketers can effectively drive growth. While Binet and Field accurately describe their findings as tentative - more about this later - this research is provocative and should be given serious consideration.

Below is a brief summary of the five principles discussed in the report.

Principle 1 - Invest in Share of Voice

Share of voice is typically defined as a brand's share of all category advertising expenditures. A long-standing principle in B2C marketing is that brands tend to grow when their share of voice exceeds their market share, if all other things are equal. Brands whose share of voice is less than their market share tend to shrink. Binet and Field found that this principle is equally true for B2B companies.

Principle 2 - Balance Brand and Activation

Binet and Field argue that B2B companies should balance their spending on brand building activities and sales activation activities.  They define sales activation as any marketing activity that is designed to produce an immediate response from a potential customer.

Sales activation activities usually produce results relatively quickly, and their short-term ROI can be high. But the effects of sales activation activities don't last very long, so they don't foster long-term growth. Brand building activities, on the other hand, excel at driving long-term growth because their  effects last longer.

Binet and Field found that the effectiveness of B2B marketing is maximized when a company allocates about 46% of its marketing budget to brand building and about 54% to short-term sales activation.

Principle 3 - Expand Your Customer Base

The growing importance of customer experience, and the shift to subscription-based business models have led some B2B marketers to place greater emphasis on programs intended to improve customer retention and loyalty. However, the research by Binet and Field found that customer acquisition strategies are much more effective at driving growth than customer retention/loyalty strategies. They also found that reach strategies - strategies that seek to engage both customers and non-customers - tend to be most effective of all.

Principle 4 - Maximize Mental Availability

According to psychologists, human beings use a variety of mental shortcuts called heuristics when they make decisions. One of the most important mental shortcuts is the availability heuristic, which says that when people are facing a choice between several options, they will tend to prefer the option that comes to mind most easily.

Marketers have long known that the availability heuristic plays an important role in B2C marketing. The research by Binet and Field found that mental availability is also critical in B2B marketing, and that marketing activities that increase share of mind are highly effective at driving growth.

Principle 5 - Harness the Power of Emotion

Binet and Field found that emotions are almost as important in B2B buying as they are in B2C buying. Specifically, they found that B2B advertising messaging that appeals mostly to emotions is far better at creating brand preference than more rational content. Conversely, rational arguments perform better than emotional appeals when the main objective is short-term sales activation. The researchers also argued that emotional brand building programs can improve the effectiveness of rational sales activation programs.

Caveats

As I noted earlier, Binet and Field acknowledged in the research report that their conclusions should be viewed as tentative for several reasons:

• The research was based on an analysis of less than 50 cases in the IPA Databank, so the sample size is very small.
• The campaigns analyzed may not be representative of B2B marketing in general.
• The campaigns analyzed tended to have relatively large budgets.
• Most of the campaigns analyzed were run in the UK.

Despite these caveats, the research by Binet and Field raises several important issues, and I hope to see more research on these issues. Much of the conversation in B2B marketing focuses on how many things have changed. The research by Binet and Field reminds us that some things may not have changed as much as we usually think.

Image Source:  The B2B Institute (LinkedIn)

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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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Two Ways to Improve Your ROI Credibility

With the fourth quarter of 2019 well underway, many marketing leaders will have already started planning for 2020. In most cases, the planning process will include an analysis of how well marketing performed in 2019. and many marketing leaders will use return on investment (ROI) as the primary tool for conducting this assessment.

Over the past two-plus decades, ROI has become the "gold standard" for measuring marketing performance and for communicating the performance and value of marketing to senior company leaders. So you would think that, by now, marketing leaders would thoroughly understand what marketing ROI is, and how to calculate it correctly. Unfortunately, however, that is not always the case, as a recent survey conducted by LinkedIn Marketing Solutions makes clear.

The LinkedIn Research

The Long and Short of ROI report is based on a survey of 4,000 B2B and B2C marketing professionals from 19 countries. Survey respondents worked in a wide range of industry sectors, including technology, financial services, professional services, and manufacturing. The survey was conducted in June 2019.

Most of the results presented in the survey report refer to "digital marketers." Unfortunately, the report does not define who "digital marketers" are, nor does it indicate whether all of the survey respondents were "digital marketers." With that caveat in mind, here are the "headline" findings from the LinkedIn study:

• 70% of digital marketers claim they are currently measuring ROI.
• 77% of digital marketers measure ROI during the first month of a campaign, even though 55% of those marketers reported having a sales cycle that is at least three months long.
• When most digital marketers say they are measuring ROI, they are actually measuring a variety of key performance indicators (KPIs), but not true ROI.
• 63% of digital marketers don't have a high level of confidence in the "ROI" metrics they are currently using.

The LinkedIn survey report argues that marketers should (a) clearly distinguish between KPI-based metrics and ROI, and (b) measure ROI over the length of the sales cycle in order to obtain accurate results.

When You Say ROI . . .Mean ROI

The findings of the LinkedIn survey highlight two of the still all-too-prevalent ways that many marketers are misusing ROI. First, many marketers use "ROI" as a catch-all term to describe a wide variety of benefits produced by marketing activities. But return on investment is a specific financial metric that has a well-established meaning among management and financial professionals.

This means that none of the following constitutes ROI:

• Increased brand awareness
• Increased market share
• Increased customer lifetime value
• Increased average deal size
• Improved conversion rates
• Improved response rates
• Improved NPS/customer satisfaction scores

For many companies, tracking some or all of these performance measures will be valuable, but they do not constitute marketing ROI. Calling any of these benefits "ROI" reflects a misunderstanding of what ROI is, and if a marketing leader presents one of these kinds of ROI calculations to a CEO or CFO, his or her credibility will be weakened.

Calculate ROI Correctly

The second way that many marketers misuse ROI is to calculate it incorrectly. The basic formula for marketing ROI (MROI) is:

MROI = (Gain from Marketing Investment - Cost of Marketing Investment) / Cost of Marketing Investment

So the basic MROI formula contains only three components:

1. The financial gain from the marketing investment
2. The cost of the marketing investment
3. Time - Although the formula doesn't expressly contain a "time" value, MROI is always measured for a defined period of time.

While the basic MROI formula appears to be quite simple, that simplicity is deceptive. In reality, calculating MROI accurately can become a complex task because every component of the formula presents questions that require thoughtful answers and sound judgment calls.

I've addressed many of these issues in several previous posts, so I won't repeat that material here. However, I've provided links to my ROI-related posts below. If you're involved in calculating MROI, I encourage you to take a look at these posts and carefully consider the issues they discuss.

Image courtesy of Rick B via Flickr CC.

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Why Proving the Impact of Marketing is Difficult

For Better Marketing Decisions, Think Incrementally

Increased Profits, Not Higher Revenues, Determine Marketing ROI

Let's End the Obsession with Marketing ROI

Stop Trying to Measure Marketing ROI

Analyzing the ROI Formula - Part 3

Analyzing the ROI Formula - Part 2

Analyzing the ROI Formula - Part 1

The Basic Idea of Return on Investment

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Where Marketers are Missing the Mark with Customers

The New York chapter of the American Marketing Association has just published a research report that should be required reading for marketers. The Techlash is Here report addresses several aspects of marketing in the world's two largest economies - the United States and China. While the findings about China are interesting, this post will focus on the U.S. results.

The U.S. part of the research consisted of two quantitative surveys and several interviews with marketing leaders. One survey included 502 marketing executives - about 200 from agencies and approximately 300 from brand owners. The second survey polled 508 U.S. consumers. The consumer sample was matched to population data through weighting.

This research revealed two significant disconnects between U.S. consumers and U.S. marketers, one pertaining to social media, and one relating to the appetite for, and concerns about, new marketing technologies and practices.

The Social Media Marketing Bubble

According to Investopedia, a bubble is "created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behavior." The AMA New York surveys suggest that a different kind of bubble may exist in the social media marketing space.

In the consumer survey, respondents said they expect their use of social media to decline over the next three years. The net change (the proportion of respondents expecting to spend more time on social media minus the proportion who expect to spend less time) was -6%. The survey also found that Facebook use is likely to show no net growth over the next three years, while the use of Twitter, Snapchat, and LinkedIn will decline over that period.

U.S. marketers, on the other hand, plan to substantially increase spending on social media advertising over the next three years. In the marketer survey, social media generated the strongest indication of increased spending (net 68%), followed by web display ads (net 51%) and email (net 47%).

Other research has found a similar exuberance for social media among marketers. In the August 2019 edition of The CMO Survey, respondents said they expect spending on social media to increase from 11.9% of their current marketing budget to 22.5% of the budget in five years.

The Techlash is Here report describes the emerging social media marketing bubble (my term, not theirs) as follows:

"American marketers are overindexing on many social media now and plan to increase spending even as consumer use flatlines or falls off. Currently, the share of ad spend devoted to social media in America . . . is 150% of the proportion of consumer media time they receive."

The Technology Disconnect

The AMA New York surveys also investigated the attitudes of U.S. marketers and consumers about nine specific marketing/advertising technologies and techniques. In this research, between two-fifths and three-fifths of U.S. marketers said they plan to increase their use of every one of those nine innovations, as the following table shows:

A striking disconnect between marketers and consumers becomes apparent when we look at the results of the consumer survey. As the table below shows, none of the nine technologies or techniques is viewed favorably by a majority of U.S. consumers. Four of the nine did receive a favorable plurality by survey respondents, but five of the nine technologies and techniques are viewed unfavorably by a plurality of U.S. consumers.

Once again, the survey report describes the current situation in compelling terms:

"American marketers overrate the perceived positives of marketing innovations:  most expect that U.S. consumers will consistently welcome them . . . On average, nearly four out of five (78%) expect American consumers will agree with each benefit claim we tested. The proportion of marketers who say consumers will agree substantially exceeds that of consumers who do on every one of them - by an average of 27 points."

The Takeaway

The AMA New York research should serve as a wake-up call for marketers. It highlights the risks inherent in getting caught up in the hype that inevitably surrounds new marketing channels, techniques, and technologies. While this research dealt with important disconnects between marketers and consumers, many of the study findings will apply to B2B marketers and business buyers.

Marketers' exuberance for new technologies and techniques is often attributed to the fear-of-missing-out or the shiny object syndrome. This view is overly harsh, but it does contain some truth. FOMO can actually be a positive thing when it motivates us to experiment and test new tactics and tools. But if it isn't tightly controlled, FOMO can also result in bad - or at least ineffective - marketing investments.

The findings of the AMA New York research regarding personalization are particularly noteworthy. As I have previously written, marketers are facing a true conundrum regarding when and how much personalization should be used. In fact, I would argue that the personalization-privacy paradox will be an "elephant-in-the-room" issue for marketers in 2020. I'll have more to say about that in a future post.

Top image courtesy of Artura Pardavila III via Flickr CC.

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Why It's So Hard for Companies to Change

In 2013, Scott Brinker, Hubspot's VP Platform Ecosystem, and the author of the widely-read Chief Marketing Technologist blog, published a post that introduced Martec's Law. In essence, Martec's Law states that technology changes at an exponential (very fast) rate, but organizations change at a logarithmic (much slower) rate. (See Scott's graph below.)

The rapid development of marketing technology is well documented. The 2014 edition of Scott's marketing technology landscape supergraphic contained 947 technology providers. The 2019 edition of the supergraphic contained more than 7,000 technology solutions.

Scott argued that the core problem encapsulated by Martec's Law is that "technology is changing faster than organizations can absorb change." And it's clear that this problem extends far beyond marketing.

Over the past few years, digital transformation - which can be defined as the use of digital technologies to create new, or reengineer existing, processes, culture, and customer experience - has become an important strategic objective objective for many companies. However, the evidence indicates that most digital transformation initiatives have not succeeded.

In recent research by McKinsey & Company, only 16% of survey respondents said their organizations' digital transformations have successfully improved performance and also equipped them to sustain changes over the long term.

So why is change so hard? Hundreds of books and articles have attempted to explain why change is difficult for most organizations, and what business leaders can do to create a greater willingness and capacity to change. While many of these books and articles have contained valuable advice, it seems clear that no one has really identified the "silver bullet" that will consistently boost the capacity for change.

Clayton Christensen has developed a framework that can help us understand why organizational change is difficult. Christensen described this framework in an article in the Harvard Business Review (co-authored with Michael Overdorf), and elaborated on it in The Innovator's Solution (co-authored with Michael Raynor). Christensen developed this framework to help business leaders succeed at disruptive innovation, but it is equally useful for identifying the factors that determine how effectively a company can make any significant, far-reaching change.

According to Christensen, the ability of an organization to succeed with any significant transformation depends on three types of capabilities - resources, processes, and values.

Resources - Resources include people and tangible business assets such as cash, facilities, equipment, and technology solutions. Resources can also include intangible assets like intellectual property and relationships with suppliers and customers.

Processes - Processes are the activities that organizations perform to transform resource inputs into finished products or services.

Values - Values include the ethical principles that an organization "lives by," but the term has a broader meaning in this framework. It also includes the criteria or standards that people in the organization use to set priorities and make decisions. Therefore, values include the myriad of (mostly unwritten) cultural rules and norms that influence how people in the organization think and act.

Resources, processes, and values largely dictate what an organization can and cannot accomplish. And they both enable and constrain an organization's capacity for change.

To understand why organizational change is difficult, it's critical to keep two points in mind about resources, processes, and values. First, any significant change or transformation will require changes in all three organizational capabilities. In other words, any successful transformation will likely require the organization to find or develop new resources (or redeploy existing resources), develop new processes (or reengineer existing processes), and modify its values.

The second important point is that the three organizational capabilities are not equally easy to change. Resources are usually the most flexible capability and are relatively easy to change. Processes are usually less flexible than resources and are therefore somewhat more difficult to change.

Clearly though, the most difficult capability to change is values. Values are difficult to change because they tend to develop slowly and over time, they become deeply ingrained in an organization's cultural DNA. When change initiatives don't succeed, it's most likely because company leaders have underestimated (a) the need to change core company values, or (b) how difficult those changes are to make.

Christensen's RPV framework doesn't make organizational change easier to accomplish, but it can help business leaders, including those in marketing, to identify where the greatest barriers to change are likely to exist.

Top image courtesy of R/DV/RS via Flickr CC.

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Effective B2B Marketing Demands Original Research

A few days ago, Mantis Research and BuzzSumo published the results of their latest survey regarding the use of original research in marketing. The State of Original Research for Marketing 2019 survey was fielded in May and June of this year and produced 644 responses from global marketers. Forty-seven percent of the respondents were from the United States, and 70% were affiliated with B2B companies.

Both Michele Linn with Mantis Research and Chris McCormick with BuzzSumo have written excellent summaries of the research results. You can find Michele's summary here and Chris' summary here. If you're a B2B marketer, I encourage you to read both of these articles, and even better, take the time to review the full survey report.

In the 2019 survey, 39% of the respondents said they had published the results of original research within the 12 months preceding the survey. The comparable percentage in the 2018 version of the survey was 47%. Chris McCormick believes this drop is primarily due to a shift in the demographics of the survey pool rather than a decline in research use, and I tend to agree with his view.

The survey also found that users of original research for marketing are generally satisfied with its performance. Sixty-one percent of the respondents who had conducted research reported that it had met or exceeded their expectations, and 88% said they plan to conduct additional research in the next 12 months.

So overall, this study indicates that a substantial number of companies have made original research an integral part of their marketing efforts.

The use of original research in marketing is not a new phenomenon. However, I would argue that for most large and mid-size B2B companies, and for many smaller B2B firms, original research has now become essential for effective marketing. Here's why.

Effective B2B Marketing Requires Real Thought Leadership Content

For most B2B companies, effective marketing now requires the development of compelling thought leadership content. Numerous research studies have confirmed that business buyers highly value thought leadership content, and that it impacts B2B purchase decisions at every stage of the buying process.

For example, in a 2018 survey of 1,201 business decision makers by Edelman and LinkedIn:

• 58% of respondents said they spend one hour or more per week consuming thought leadership content
• 55% said thought leadership content is a important way to vet potential suppliers
• 58% said good thought leadership content caused them to award business to a company
• 61% of C-level respondents said good thought leadership content made them more willing to pay a premium to work with a company

Real Thought Leadership Content Must Be Novel and Authoritative

The explosive proliferation of content over the past several years had made it difficult for marketers to create content that will cut through the noise. Thought leadership content can do just that, but only if the constitutes "real" thought leadership. There are two attributes that define real thought leadership and distinguish it from other types of marketing content.

Real thought leadership is novel - Real thought leadership content provides information and insights that are genuinely novel. Merriam-Webster defines novel as "new and not resembling something formerly known or used." Therefore, to qualify as real thought leadership, content must provide information or insight that adds something new and meaningful to the body of knowledge about a topic.

Real thought leadership is authoritative - It's important for all types of marketing content to be credible, but thought leadership content must meet a higher standard. Because thought leadership content advocates new and novel ideas, it's essential for content developers to support those ideas with sound and persuasive evidence.

Real Thought Leadership Content Requires Original Research

The only way to consistently develop novel and authoritative content is by conducting original research. Original research actually plays two central roles in the development of real thought leadership content. First, original research is required to capture the new information and develop the new insights that make thought leadership content novel. And second, original research is critical for thought leadership content because it provides the evidence that makes the content authoritative.

So the bottom line is, effective B2B marketing requires compelling thought leadership content, and original research is the only viable source for such content.

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

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Why One Strategy for the Status Quo Isn't Enough

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.

Key Takeaway

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.

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How to Reinforce the Status Quo

What to Do When the Status Quo is Your Friend

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Measuring the Maturity of Marketing Operations

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.

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New Research on the Attributes of Complex Buying Decisions

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.

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McKinsey on How CMOs Can Effectively Lead Growth

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.

My Take

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).

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Two Ways to Make Personalization Welcomed

In my last post, I discussed the inconsistent and often contradictory attitudes of consumers and business buyers regarding personalized marketing. On one hand, numerous research studies have confirmed that most consumers and business buyers want personalized offers, messages, and experiences, and are willing to provide personal information in order to receive such offers, messages, and experiences.

On the other hand, several studies have found that customers and potential buyers are growing more concerned about privacy, and aren't comfortable with how some companies are collecting, accumulating, and using their personal or business information. In one fairly large study, less than half of the respondents (48%) agreed that, "There are ethical ways in which a company can use my personal information.

These conflicting attitudes are creating a Catch-22 for marketers because it's now clear that personalization is a high-stakes game. Effective personalization drives broad and significant business benefits, but when marketers get personalization wrong, the consequences can be serious. In one survey, 38% of the respondents said they would stop doing business with a company that sends them "creepy" personalized messages.

So far, most marketing pundits and many marketing leaders seem to believe that the key to maximizing the benefits of personalized marketing is more personalization. In other words, collect and use more data about customers and prospects, make personalization more specific, and use personalization more frequently, in more channels, and for more types of communications and experiences. This explains why hyper-personalization and personalization at scale have recently become such popular buzzwords.

The "more personalization" approach is based on the idea that increased personalization will increase the relevance of messages and experiences, and that the improved relevance will make those messages and experiences more compelling, interesting, and/or satisfying for customers or potential buyers. The problem with the approach is that it doesn't address the privacy half of the personalization-privacy conundrum, nor does it provide specific guidance about what attributes (other than relevance) cause personalized marketing to be welcomed by potential buyers.

We need to use a different approach to deal with privacy concerns and maximize the benefits we obtain from personalization. Here are two related steps marketers can take to get the most from personalized marketing.

Base Personalization on "Informed Consent"

The key to alleviating privacy concerns is to base personalization on data that each customer or prospect has willingly and consciously provided for a clearly-stated purpose. This approach addresses three practices that frequently cause a customer or prospect to view personalized communications as presumptuous, invasive, or "creepy:"

• When a company bases personalization on data that the customer has not directly shared with the company (e.g. third-party data)
• When a company bases personalization on data that the customer or prospect has not consciously shared with the company (e.g location data from a smartphone, browsing history, etc.)
• When a company ostensibly collects information for one purpose and then uses the data for other purposes.

Customers and prospects won't see personalized marketing as intrusive or "creepy" when they willingly provide personal data in exchange for personalized content or experiences that are designed to serve a clearly understood purpose.

Make Personalization Pragmatically Useful

The most effective personalized marketing programs are those that deliver meaningful, pragmatic value to recipients. A recent study by Gartner/CEB provides strong confirmation of the importance of making personalization useful. The centerpiece of this study was a 2018 survey of more than 2,500 consumers in North America, Europe, and Asia-Pacific.

One objective of this study was to identify what type of personalization is most effective. So survey participants were asked several questions about the content of the personalized messages they received. Based on the survey responses, Gartner/CEB identified two basic types of personalization:

• "Prove You Know Me" Personalization - These types of messages mention the recipient's personal information, base personalization on information about the recipient's past purchases from the company, or generally reflect the recipient's interests in some way.
• "Help Me" Personalization - According to Gartner/CEB, these types of messages can make it easier for the recipient to complete a purchase, help the recipient understand how to better use a product, or otherwise help the recipient solve a problem or address a need.

To measure the relative effectiveness of these types of personalization, Gartner/CEB created a "Commercial Benefit Index" that considered four consumer intent or behavior factors - brand intent, purchase, repurchase, and increase in shopping cart size. When Gartner/CEB analyzed the change in the Commercial Benefit Index produced by each type of personalization, they found that "Help Me" personalization produced a 16% increase in the CBI, while "Prove You Know Me" personalization resulted in a 4% decline in the CBI.

The Takeaway

The important point here is that marketers should organize their personalization efforts around specific "programs" that are designed to serve a clearly-defined purpose and provide pragmatic value. When customers or prospects proactively choose to participate in a program by providing relevant personal information, the personalization-privacy conundrum disappears, the personalization will be welcomed, and it will be more compelling and impactful.

Top image courtesy of Richard Patterson via Flickr CC.

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Don't Rely Too Much on Marketing Best Practices

More than two decades ago, Michael Porter warned about the dangers of relying on benchmarking and "best practices" to produce business success. In a landmark article in the Harvard Business Review, Porter drew a sharp distinction between operational effectiveness - which often involves identifying and implementing best practices - and real business strategy.

Porter argued that competing primarily on the basis of operational effectiveness is usually a recipe for disaster. He wrote:  "The more benchmarking companies do, the more they look alike . . . As rivals imitate one another's improvements in quality, cycle times, or supplier partnerships, strategies converge and competition becomes a series of races down identical paths that no one can win."

Four years after Porter's article, Philipp Nattermann made a similar argument in an article for the McKinsey Quarterly. In this article, Nattermann contended that benchmarking and the use of best practices are important ways to improve operational efficiency, but they are not tools for strategic decision making. He wrote that business leaders rely too much on benchmarking and best practices because:

". . . they don't understand that benchmarking is simply an operational tool. Instead, they all want to occupy the point on the strategic landscape they their most successful competitor has staked out. Soon other competitors can be seen herding, lemminglike, around that best practice company's product, pricing, and channel strategies. Products and services become increasingly commoditized and margins tumble as more and more incumbents compete for smaller and smaller segments of customers and industry resources."

Despite the risks associated with best practices, business leaders continue to regard the identification and implementation of best practices as one of the most powerful management tools at their disposal. And it's not difficult to understand why the use of best practices remains so popular. It seems immanently reasonable to identify the practices of successful, high-performing companies and then emulate those practices.

The Allure of Marketing Best Practices

Marketers can become particularly enamored with best practices. After all, marketing success is difficult to achieve and even harder to sustain because the marketing landscape is always changing, and because it's incredibly hard to predict what marketing methods, channels, and message formats will appeal to potential customers. In these circumstances, it shouldn't be surprising that marketers are attracted to "proven" best practices.

Marketing best practices are often portrayed as effective and reliable tools for achieving marketing success, but the reality is more nuanced. Marketing best practices can be helpful when they are understood correctly and used appropriately, but it's easy for marketers to become enthralled with the promised benefits of best practices, and forget their limitations.

Widespread Use Decreases Effectiveness

One of the most paradoxical characteristics of marketing best practices is that the more widely they are used, the less effective they tend to become. A marketing best practice can derive its effectiveness from several sources. It can be effective because it's based on sound business principles, or because it resonates with how potential customers make decisions, or because it effectively leverages the capabilities of a particular medium of communication.

But marketing best practices are also highly effective - at least for a while -  because they are distinctive. When a best practice is new, it tends to be used by a relatively small number of companies. Therefore, the practice stands out in the marketplace and captures the attention of potential customers. But as more and more companies implement the practice, it loses some of the distinctiveness that made it highly effective. Content marketing is a good example of a marketing best practice that is now more challenging because it is so widely used.

The bottom line is, identifying and implementing marketing best practices may lead to a temporary improvement in marketing results, but it won't deliver superior marketing performance over the long term. Superior long-term marketing performance requires an effective marketing strategy and the use of marketing methods and tactics that will make your company distinctive in the marketplace.

Image courtesy of Paul Mison via Flickr CC.

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