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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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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Despite Challenges, Marketers Remain Committed to CX Technologies

In my last post, I discussed some of the findings from a recent study by The Harris Poll and RedPoint Global. Addressing The Gaps In Customer Experience was based on the results of two surveys. One involved 454 senior marketing and customer experience executives, and the second involved 3,002 adult consumers. The participants in both surveys resided in the United States, Canada, or the United Kingdom.

As the title of the research report suggests, the primary objective of this study was to identify where and how the perceptions of marketers and consumers about the quality of customer experiences differ. I discussed some of those findings in my earlier post.

This research also provides several interesting insights about how marketers view the technologies they use to deliver customer experiences. Somewhat surprisingly, the marketers in this study view technology as essential for providing great customer experiences and as a source of major challenges.

The Strategy-Execution Gap

First, it's important to put the findings about technology in the right context. Most of the marketers in this study were satisfied with their customer experience strategy, but not with its execution. More than half (57%) of the surveyed marketers said their company has the right customer experience strategy, but isn't able to execute it effectively. An even higher percentage (63%) said their company doesn't execute its customer experience strategy "very well."

When the survey participants were asked about the challenges associated with closing the strategy-execution gap, the top three challenges identified were:

• The complexity of technology solutions (39% of respondents)
• Lack of cross-functional commitment to strategy (35%)
• The inability to integrate new capabilities with existing processes or technology (33%)

Satisfaction With Technology

On average, the marketers in the study said their company is currently using 10 customer engagement technology systems. About one in five of the survey respondents said their company is using more than 20 customer engagement systems.

The sheer number of technology systems is creating a challenge for marketers. Nearly two-thirds (65%) of the marketers in this study said the number of customer engagement systems they are using makes it harder for them to provide a seamless customer experience.

Only about a third (more or less) of the surveyed marketers were very satisfied with their ability to leverage technology to achieve several key customer experience objectives, as the following table shows:

Despite the challenges associated with CX-related technologies, marketing leaders are committed to a technology-enabled future. More than nine in ten (91%) of the marketers in this study said that investing in marketing and CX technologies is a key initiative for their company.

Twenty-one percent of the surveyed marketers said they expect the number of customer engagement systems used by their company will increase over the next year, and even more (39%) think the number will increase over the next five years.

The Takeaway

These findings make the point that marketers and other CX professionals have more work to do to capture the full benefits of marketing and other customer engagement technologies. But these technologies are evolving rapidly, so it shouldn't be surprising that marketers and other CX professionals are still learning how to maximize their value. In my view, this is to be expected, and it's not a business-threatening problem unless the "proficiency gap" becomes too great.

Top image courtesy of Rabin Pamela via Flickr CC.

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New Research Highlights Personalization, Privacy, and Customer Experience Performance

Senior company leaders in virtually all types of businesses now recognize that providing great customer experiences is a critical source of competitive advantage and a primary driver of business performance. As a result, customer experience (CX) management has become a top strategic priority in many enterprises.

Given this interest, it shouldn't be surprising that CX has been the subject of numerous research studies over the past several years. One of the best studies I've seen recently was published earlier this year by The Harris Poll and RedPoint Global.

Addressing The Gaps In Customer Experience was based on two surveys that were fielded in early 2019. One was a survey of 454 senior marketing executives residing in the United States, Canada, or the United Kingdom. This survey also included technology and customer experience executives, but I'll refer to the participants in this post as "marketers" or "marketing leaders."

All of the surveyed marketers were affiliated with companies having a minimum of $500 million in annual revenue. (Note:  The annual revenue minimum was $200 million for companies that derive more than 50% of their revenue from direct sales to end users.

The second survey involved 3,002 consumers (18+ years of age) residing in the United States, Canada, or the United Kingdom. Figures for age, gender, education, region, and employment status were weighted where necessary to bring them into line with their actual proportion in the population.

This type of study is particularly instructive and useful because it enables us to compare and contrast the perspectives of marketing leaders and consumers, and this is very valuable when the topic is customer experience. As the title of the research report suggests, these surveys found several significant gaps between marketers and consumers regarding customer experience performance.

The Performance Gap

The "headline" finding from this research was that marketers rate the quality of their customer experience capabilities significantly higher than consumers. Ninety-two percent of the marketers said their ability to provide an exceptional customer experience is excellent or good. But when the consumers were asked to think about the companies they interact with on a regular basis, only 80% rated these companies as excellent or good at providing great customer experiences.

The contrast is even greater if we look only at the "excellent" rating. Thirty-four percent of the marketing leaders gave themselves an excellent rating, but only 18% of consumers gave that highest rating.

This research used a "Customer Experience Index Score" to evaluate CX performance across four dimensions - privacy, personalization, customer understanding, and omnichannel/consistency. Not surprisingly, marketers gave themselves higher scores on all four dimensions than consumers.

Personalization and Privacy are Paramount

The findings of this study also provide compelling evidence that both personalization and privacy are of paramount importance when it comes to customer experience. In the consumer survey, 63% of the respondents said that personalization is now part of the standard service they expect, and over half (53%) said they expect a company to know their buying habits and preferences and be able to anticipate their needs.

Customer expectations for personalization have risen to the point that 37% of the consumers said they would stop doing business with a company that doesn't offer a personalized experience. And while 36% of the survey respondents said that companies are presenting them with more personalized offers and messages compared to a year ago, 73% said that companies are still struggling to meet their expectations for personalized experiences.

Consumers in this study also made it abundantly clear that privacy is a primary concern. In fact, they ranked privacy as the most important dimension of customer experience, and 41% of the survey respondents said they would absolutely stop doing business with a company that sells their data to other companies for marketing or advertising purposes without their permission.

The consumer survey also asked participants about the importance of four privacy-related actions that companies can take. The following table shows the percentages of respondents who rated each action as very important or absolutely essential:

The Harris Poll/RedPoint Global research also has several important things to say about the role of technology in providing great customer experiences. I'll discuss those findings in a future post.

Top image courtesy of citylovesyou_ffm via Flickr CC.

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With Personalization, Less Can Be More

There is no longer any doubt that marketers overwhelmingly believe in the value of personalization. Most marketing leaders now view personalization as essential to marketing success, and providing personalized messages and customer experiences has become a top priority in many companies.

Numerous research studies have confirmed that large majorities of marketers believe personalization improves marketing and business performance. For example, in the 2019 Trends in Personalization survey by Researchscape International, 70% of surveyed marketers said personalization has a strong or extremely strong impact on advancing customer relationships.

And in a 2018 survey of more than 600 business executives by Harvard Business Review Analytic Services, more than half of the survey respondents said personalization is an important driver of their revenue and profits.

Recent research also shows, however, that marketers have more work to do to realize the full potential of personalization. In the Researchscape International survey, only 16% of survey respondents said they are very or extremely satisfied with the level of personalization in their marketing efforts. Fully half of the respondents said they are not satisfied or only slightly satisfied.

To maximize the impact and effectiveness of personalization, marketers need to use the right level of personalization for each customer interaction. Most marketing pundits and many marketing leaders seem to believe that the key to maximizing the benefits of personalized marketing is more personalization. According to this view, the right strategy is to leverage every bit of available data about customers and prospects to make personalization more specific, and to use personalization more frequently, in more channels, and for more types of communications and experiences.

But as I recently argued, the problem with the "more personalization" approach is that it largely ignores the real and growing privacy concerns of both consumers and business buyers. The real key to maximizing the effectiveness of personalization is to use an appropriate level of personalization for each interaction with a customer or prospect. And in some situations, the best strategy will be less, not more, personalization.

The Corporate Visions Research

Recent research by Corporate Visions provides compelling evidence that less can in fact be more when it comes to personalization. This study consisted of a live field trial that involved nearly 7,000 potential buyers in the Corporate Visions prospect database. All of the prospects in the trial met two criteria:

• Each was a cold prospect - someone who had had no prior interaction with Corporate Visions
• Each fit the Corporate Visions ideal client profile (industry vertical, company size, and job title).

The objective of this study was to test the effectiveness of four methods or levels of personalization:

• Industry only
• Company only
• Industry + personal
• Company + personal

For the trial, Corporate Visions used emails that had identical offers and calls-to-action, but different subject lines and openings based on the method of personalization used. (Note:  The research report includes examples of the emails.)

The trial used three metrics to evaluate the effectiveness of each level of personalization - open rates, click-through rates, and number of meetings scheduled. The following table summarizes the results of the field trial.

As the table shows, the emails that used company + personal personalization (the highest level of personalization) produced the highest open rates, while those using industry only personalization (the lowest level of personalization) produced the lowest open rates. But the positions were exactly reversed with click-through rates. The emails that used industry only personalization produced the highest click-through rates, while those using company + personal personalization produced the lowest. 

In terms of meetings, the emails that embodied either industry + personal or industry only personalization produced significantly more scheduled meetings than those using either company + personal or company only personalization.

So the results of this trial indicate that when reaching out to cold prospects, messages that embody less personalization actually produce better conversion rates than messages using higher levels of personalization.

Explaining the Differences

The Corporate Visions research did not attempt to explain why the different methods or levels of personalization produced different results. However, in the research report, Leslie Talbot, Corporate Visions' Vice President of Customer and Commercial Excellence, offered a possible explanation:

"Human beings are self-centered enough to respond readily to something that looks like it's personal to us. But when we discover the underlying gimmick - that is, someone plucked a random fact from our LinkedIn profile and used it to suck us in - the letdown factor is enough to preclude further action.

Similarly, when you try to ingratiate yourself to someone by referencing an issue specific to their company, they already know you don't work there - you've just read publicly available content . . .

On the other hand, if you offer an insight about a prospect's industry, you activate their voyeurism . . . So when you share a story about how a similar company struggled and solved a common industry concern, they're better able to project themselves into the story and eager to find out what happened next."

I believe that Ms. Talbot's speculation is fairly accurate. To be effective, personalization must be based on genuine insights. When you take personalization beyond such insights, it become inauthentic, and customers or prospects will tend to view it as presumptuous.

Top image courtesy of BobChao via Flickr CC.

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