The State of Personalization in 2018

The personalization of content and messaging has been widely discussed in marketing circles for more than two decades. Numerous research studies have shown that both consumers and business buyers want companies to understand their individual needs and interests, and then tailor experiences accordingly. Virtually all marketing thought leaders agree that personalization is vital for delivering outstanding customer experiences.

So, just how far have we come in our personalization efforts? New research by Dynamic Yield provides important insights regarding the current state of personalization. The Personalization Maturity Assessment report is based on a survey of 700 marketers and executives in various business roles drawn from several industry verticals. Forty-two percent of the survey respondents were located in Asia-Pacific, 34.1% in EMEA, and 23.9% in the Americas.

This research revealed a strong belief in the value of personalization. Globally, about 26% of respondents said that personalization is at the core of their marketing/customer experience efforts, and another 46% said they understand the benefits of personalization.

Dynamic Yield's survey found that many companies have made significant progress on the personalization front. For example, 23.57% of respondents said they have a single view of the customer that enables them to personalize experiences across marketing channels, and another 23.14% said they personalize most experiences.

The survey also revealed, however, that many companies have more work to do to maximize the potential of personalization. Only about half of the respondents (49%) said their organization has prioritized personalization as a company-wide strategic initiative. And only about 52% reported having sufficient resources (money, time, personnel, etc.) to deliver personalized experiences across all marketing channels. In addition, only about 22% of the respondents said they have a centralized, cross-functional team that executes personalized campaigns across all channels.

Dynamic Yield also found that many companies need a more integrated technology stack to reap the full benefits of personalization. Only about 24% of respondents reported having an integrated tech stack that allowed them to personalize customer experiences across all touch points. Another 33% said their personalization technology is integrated with some, but not all, of their other marketing/customer experience technology systems. These findings are generally consistent with Econsultancy's 2018 Digital Trends study, in which 40% of survey respondents reported having a highly or somewhat integrated technology stack.

So overall, the Dynamic Yield study paints a fairly positive picture of the state of personalization in 2018, although it also clearly shows that there's room for improvement.

It's possible that the Dynamic Yield research slightly understates the level of personalization maturity in larger organizations. About 42% of the respondents in this study were with companies having $50 million or less in annual revenue, and 23% were with companies having under $10 million in annual revenue. It seems fair to say that larger enterprises are likely to have more experience with personalization and more resources to devote to their personalization efforts.

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How to Persuade Prospects to Leave the Status Quo

Most B2B marketing and sales professionals recognize that their more formidable competitor is usually the status quo. The grip of the status quo can result in longer sales cycles, stalled deals, and the dreaded "no decision."

Persuading prospects to move away from their status quo is a significant challenge, and there is no "silver bullet" technique or tactic that will work with every prospect. However, recent research by Corporate Visions has identified a messaging framework that can improve your odds of defeating the status quo.

The Corporate Visions Research

Corporate Visions (in association with Dr. Nick Lee, a professor of marketing at the Warwick Business School) designed an experiment to test what type of messaging is most effective at persuading business executives to move forward with a purchase. Corporate Visions discussed the experiment and the results in a very interesting report, but here's a brief description of how the experiment worked.

Study participants were asked to imagine that they are an executive at a vegetable processing company. The company has traditionally processed vegetables in large batches using large-scale equipment, but the most promising growth opportunity is organic and specialty vegetables, which require small-batch processing. The company's existing equipment is not suitable for small-batch processing.

Study participants were then divided into six groups, and each group was given a sales presentation relating to small-batch processing equipment. All of the presentations were economically equivalent, but each presentation used a different combination of message elements. After the presentation, each study participant rated the presentation based on how impactful he or she believed the message was across four dimensions:

• How urgent is the need to purchase?
• How important is the purchase to future growth?
• Confidence that the purchase is a good business decision
• How likely he or she would be to make the purchase right away

The presentation that scored highest in all four of the rated dimensions used three message elements - a description of the relevant business issue, followed by a description of unconsidered needs, followed by a detailed, quantitative ROI analysis.

In terms of breaking the grip of the status quo, the key element in this messaging framework is unconsidered needs. Corporate Visions identifies three basic types of unconsidered needs:

• Unknown needs exist when there is a problem or risk that a potential buyer is unaware of.
• Under-valued needs exist when a potential buyer is aware of a problem or risk, but doesn't understand or appreciate its impact, or how quickly the impact will be felt.
• Unmet needs exist when a potential buyer is aware of a problem or risk, but believes there's no way to effectively address it.

Emphasizing unconsidered needs is a effective way to loosen the grip of the status quo for two reasons. First, it makes the potential buyer think about a problem or threat that he or she had not previously considered. But more importantly, unconsidered needs tap into the inherent human desire to avoid losses.

In the late 1970's, research by psychologists Daniel Kahneman (who later won a Nobel Prize in economics) and Amos Tversky established three core principles of human decision-making:

• When choices are framed in terms of gains, most people are risk averse. They will usually choose a certain benefit rather than a gamble that may produce a greater benefit or no benefit at all.
• When choices are framed in terms of losses, most people become risk seeking. They will resist a choice that will result in a certain loss and will prefer a gamble that may result in a greater loss, but also may result in no loss at all.
• Humans are more sensitive to losses than to gains. We are more likely to act to avoid losses than to win gains.

Unconsidered needs are effective for breaking the grip of the status quo because they enable us to frame the flaws or weaknesses of the prospect's status quo as losses that are immediate, significant, and, most importantly, certain. When prospects recognize the reality of these losses, they become more willing to consider change.

Image courtesy of Nichole Burrows via Flickr CC.

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New Research Highlights Digital Trends for 2018

Econsultancy recently released its 2018 Digital Trends report (published in association with Adobe). This report is based on a global survey of nearly 13,000 marketing, creative, and technology professionals. Sixty percent of the respondents were from the client-side ("company marketers"), and 40% were affiliated with agencies, consulting firms, technology vendors, and other types of marketing services firms.

Econsultancy has been conducting the digital trends survey annually for eight years, and it's consistently one of the largest surveys regarding digital marketing trends that I see.

As part of the 2018 study, Econsultancy identified a group of successful organizations in order to compare the behaviors of these top-performing companies with their mainstream peers. Econsultancy defined top-performing companies as those that exceeded their top 2017 business goal by a significant margin and also significantly outperformed their competitors.

Customer Experience Remains the Prime Directive
The 2018 study revealed that customer experience remains at the top of the agenda for many marketers. When company marketers were asked to identify the single most exciting opportunity for their organization in 2018, the top three choices were:

1. Optimizing the customer experience (19% of respondents)
2. Data-driven marketing that focuses on the individual (16%)
3. Creating compelling content for digital experiences (14%)

When you consider that both insights from data and compelling content are integral to delivering great customer experiences, it's fair to say that fully 49% of these survey respondents see optimizing the customer experience as their most significant opportunity for 2018.

Other findings from the research confirm the overarching importance of customer experience. The survey asked participants to rank seven areas in order of priority for their organization in 2018. Survey respondents ranked content and experience management as their top strategic priority for this year. Forty-five percent of respondents ranked content and experience management as one of their three most important priority areas, and 20% said it was their primary focus.

Other Significant Findings
The 2018 Digital Trends report addresses several other important topics. Here are some of the other significant findings:

• Sixty percent of respondents said that digital permeates most or all of their marketing activities, and another 11% said they are a "digital-first organization."
• Most respondents said their organization will invest in digital skills and education in 2018, but top-performing companies are twice as likely to be investing significantly in those areas, compared to their mainstream peers (45% vs. 23%).
• The largest group of respondents (43%) said their marketing technology stack is "fragmented" with "inconsistent integration between technologies." However, top-performing companies are almost three times as likely as their mainstream peers to have a highly integrated, cloud-based marketing/customer experience technology stack.

Survey Demographics
It's important to make a couple of points about the demographics of the participants in the Econsultancy study. First, this study was somewhat European centric. Forty-four percent of the survey respondents were based in Europe. The next three largest geographies represented were Asia (21%), North America (16%), and Australia/New Zealand (12%). 

Second, this study did not focus exclusively on B2B companies. However, 31% of the company marketers were affiliated with B2B enterprises, and another 36% were with hybrid B2B and B2C organizations.

If you're involved in B2B marketing, the 2018 Digital Trends report is well worth your time.

Illustration courtesy of Jamie Spencer via Flickr CC.

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How to Show Buyers That Inaction Has a Price

It will come as no surprise to B2B marketing and sales professionals that sales cycles are getting longer. In the 2017 B2B Buyer's Survey by Demand Gen Report, 58% of the respondents said the length of their purchase cycle had increased compared to a year earlier, while only 10% said the length had decreased.

Other findings from the survey explain why the buying cycle has gotten longer:

• 52% of respondents said the number of people in buying groups had increased significantly.
• 77% agreed that they conduct a more detailed ROI analysis before making a purchase decision.
• 78% agreed that they "spend more time researching purchases."
• 75% agreed that they "use more sources to research and evaluate purchases."

I don't doubt that these factors are playing a role in lengthening purchase cycles, but I also contend that other factors are contributing to longer buying cycles, stalled deals, and the dreaded "no decision."

Today's business buyers are incredibly busy, and like the rest of us, they spend most of their working time dealing with issues or problems they perceive to be important and urgent. If they don't see a problem as both important and urgent, they won't give it much attention. And if the financial ramifications of a problem aren't visible, buyers won't be likely to see the problem as urgent.

In addition, psychologists have found that we humans have a natural desire to avoid or delay making difficult of complicated decisions. These factors explain why the status quo is usually your toughest competitor. In most cases, doing nothing is the easiest choice your prospect can make.

The key to breaking the grip of the status quo is convincing your potential buyers that the problem your product or service will solve is worth their time and attention. In essence, you must help your potential buyers answer two questions:  Why is it important for me to address this problem, and why should I deal with it now?

One of the most effective ways to demonstrate the importance and urgency of a problem is to make the cost of inaction visible to your potential buyers. That's why I include a cost of delay calculation in every ROI model I develop. Most ROI estimates focus on the traditional ROI metrics - the basic ROI percentage, the payback period, net present value, and possibly internal rate of return. These metrics should be included in any ROI estimate, but they won't necessarily communicate a sense of urgency to your potential buyers. That's what a cost of delay calculation does really well.

The basic cost of delay formula is:

Average Solution Benefits - Average Solution Costs

When calculating the cost of delay, you can use daily, weekly, or monthly average values. I typically choose the unit of measure based on the size of the benefits and cost values. The larger the values, the shorter the unit of measure.

To illustrate how the cost of delay calculation works, let's assume that for a particular prospect, you've determined that your solution will produce total financial benefits (cost savings, cost avoidance, etc.) of $115,000 during the first twelve months after the solution is implemented. The annual cost of your solution is $75,000, and you will need one month to implement your solution for this prospect.

Based on these facts, the monthly cost of delay would be calculated as follows:

Monthly CoD = Average Monthly Solution Benefits - Average Monthly Solution Costs

Monthly CoD = ($115,000 / 13) - ($75,000 / 12)

Monthly CoD = $8,846.15 - $6,250.00

Monthly CoD - $2,596.15

To make the cost of delay even more compelling, I will typically include a cumulative cost of delay chart somewhere in my ROI calculator. For this example, that chart would appear as follows:

Making the cost of delay visible to your potential buyers won't cure all of your sales cycle problems, but it can help create a necessary sense of urgency.

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Six Questions You Must Answer to Create Compelling Value Propositions

Customer value propositions are an essential part of a company's business strategy and the foundation for all of its marketing and sales efforts. Unfortunately, many companies don't devote enough time and energy to defining their customer value propositions, and as a result, their marketing and sales efforts aren't as productive as they could be.

It's difficult to overstate the importance of compelling value propositions. In Playing to Win:  How Strategy Really Works, A.G. Lafley and Roger L. Martin argue that a business strategy is essentially the answers to five interrelated questions, the two most important of which are:

1. Where will you play?
2. How will you win?

Lafley and Martin write, "These two choices, which are tightly bound up with one another, form the very heart of strategy and are the two most critical questions in strategy formulation."

Customer value propositions are the answers to the "how to win" question. As Lafley and Martin put it, "To determine how to win, an organization must decide what will enable it to create unique value and sustainably deliver that value to customers in a way that is distinct from the firm's competitors."

What Makes Customer Value Propositions Weak?

Despite their undeniable importance, many companies don't do a good job of identifying their customer value propositions or developing content resources and sales messaging that articulate those value propositions in a compelling way.

A few years ago, CEB conducted a survey of decision makers in B2B companies and found that only 57% of the "unique benefits" touted by sellers were seen by potential buyers as having enough impact to create a preference for a particular seller.

Over the past 25 years, I've reviewed hundreds of the value propositions used by clients, and what I've consistently found is that weak value propositions fall into three main categories:

1. They are too generic. They don't speak to how value is created for specific types of companies or buyers.
2. They focus on product or service features rather than on the tangible results a customer obtains by using a product or service.
3. The don't include credible supporting evidence.

Not surprisingly, strong B2B value propositions exhibit the opposite characteristics. They describe specific elements of value for specific types of companies and buyers, they focus on business/economic results or outcomes, and they include credible evidence to support their value claims.

How to Develop Compelling Customer Value Propositions

Defining strong customer value propositions comes down to answering six fundamental questions about each major type or category of product or service that you offer:

1. What are all of the significant reasons that people have for purchasing a product or service like mine? What problems or needs motivate the buying decision?
2. What kinds of companies are likely to have the problems or needs that underlie these reasons to buy?
3. Who within the prospect organization is affected by each problem or need? Who has the most to gain if the problem is solved and the most to lose if it isn't?
4. What specific outcomes are these people seeking?
5. What features of my solution will produce these desired outcomes?
6. What will the business/economic benefits be if these desired outcomes are achieved?

Using these six questions to define your customer value propositions will provide the essential foundation for developing effective marketing and sales content and messaging.

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Use the 70-20-10 Formula for Better B2B Marketing

The most important and difficult decisions that marketing leaders must make inevitably involve the allocation of marketing resources (money, people, time, etc.).

Regardless of company size, the resources available for marketing are rarely sufficient to enable marketing leaders to do everything they'd like to do. Therefore, resource allocation is an intrinsic part of every significant marketing decision, and the challenge for marketing leaders is to use their finite resources for programs and capabilities that will produce maximum results.

Deciding where and how to invest limited marketing resources has never been simple or easy, but these decisions have become more complex and challenging because today's marketing leaders have more options than ever before. Over the past several years, the number of marketing channels and techniques has grown dramatically, and the explosive proliferation of marketing technologies has been well documented.

Marketing investment decisions are further complicated by the need to maximize performance in the present, while simultaneously laying the foundation for success in the future. Because customer expectations and preferences are constantly evolving, marketing techniques that are highly effective today may become less effective in the future, while marketing techniques and capabilities that aren't very important today may become key to future marketing success.

Fortunately, there's a good rule of thumb called the 70-20-10 rule that marketers can use to address this particular aspect of the resource allocation challenge. The 70-20-10 rule is used for a variety of business purposes. Many companies, including Google, use it to manage innovation resources. Coca Cola has reportedly used a version of the rule for years to guide marketing investment decisions. Here's how the rule works.

The 70%

The marketing version of the 70-20-10 rule states that about 70% of your marketing budget should be spent on capabilities and programs with a well-established 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 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.

Your primary goal with these capabilities and programs is to drive incremental performance improvements.

The 20%

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

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Why Brand Building Still Matters in B2B

Most of you have probably heard the story about the inebriated man who had lost the keys to his house and was searching for them under a street light. A police officer comes over and asks what he's doing. "I'm looking for my keys," the man says. He points to a spot about twenty feet away and says, "I lost them over there." The police officer looks puzzled and asks, "Then why are you looking for them all the way over here?" The man replies, "Because the light is so much better over here."

For the past several years, marketers have been focused on measuring the performance of marketing tactics, channels, and programs, and many marketing leaders are now using performance data to allocate budgets. Overall, this has been a positive development. Using performance data to guide marketing investments can lead to more rational, evidenced-based decisions.

But, there's also a potential dark side to the current fixation on marketing performance metrics. The problem arises when marketers conflate ease of measurement with value, and choose marketing tactics based primarily on how easy they are to measure. Some marketers seem to believe that if an activity can't be easily measured, it's not worth doing.

Making ease of measurement the primary basis for using (or not using) a marketing technique is both short-sighted and dangerous. It's a classic example of the McNamara Fallacy, which social scientist Daniel Yankelovich described as follows:

"The first step is to measure whatever can easily be measured. This is OK as far as it goes. The second step is to disregard that which can't be easily measured or to give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what can't be easily measured really isn't important. This is blindness."

Brand marketing has been particularly susceptible to this way of thinking in the B2B space. Some marketing pundits have asserted that brand marketing is no longer important for most B2B companies and that new marketing techniques have made B2B branding largely obsolete.

It is more challenging to measure the impact of some brand marketing programs, but research has consistently shown that a strong brand creates significant value for many B2B companies. A 2017 analysis by TechTarget provides persuasive evidence that effective brand marketing can boost marketing performance. This analysis covered 1,675 branding campaigns run on the TechTarget network from 2015 to 2017.

The TechTarget analysis found that consistent brand advertisers increased consideration performance by 25%, sporadic advertisers improved consideration by 10%, and non-advertisers saw consideration decline by 10%-15%. TechTarget also found that when companies ran simultaneous brand advertising and demand generation e-mail programs targeting the same potential buyers, e-mail click-through rates were 22% higher compared to e-mail only programs. Equally important, targeted brand advertising improved funnel conversion rates (lead to MQL to SQL) by 25%.

Research by CEB has also shown the value of building a strong brand. In a 2013 study, CEB compared the behaviors of high brand consideration customers with those of no brand consideration customers. High brand consideration customers were those who gave brands high scores for trust, image, and industry leadership. The CEB study found that high brand consideration customers were:

• 5 times more likely to give consideration to a brand
• 13 times more likely to purchase from a brand
• 30 times more likely to be willing to pay a price premium

The techniques used for brand marketing have certainly evolved over the past several years. Today, the creation and publication of compelling thought leadership content will be the most effective way to build the brand for many B2B companies. Recent research has shown that great thought leadership content will have a positive impact on buyers at every stage of the buying process. The tactics may have changed, but brand building is still a critical marketing function for many B2B companies.

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