Volume 189: Pre-Purchase Relationships at Scale.
Building Pre-Purchase Relationships at Scale.
While idly sending my anxiety index through the roof (AKA trawling through LinkedIn in a moment of weakness/boredom), I chanced upon this post by my friend Jonathan.
In it, he makes the simple yet compelling point that B2B marketers have shifted wholesale toward a highly transactional, optimized for low-involvement purchases, “performance marketing” model in high-involvement categories where building a relationship prior to the transaction often matters more than the transaction itself. In other words, he’s postulating that taking a short-termist, transactional stance toward marketing is likely proving highly ineffective for many B2B corporations.
I can’t second this observation loudly enough. I see its impact daily on the clients I work with, so I figured it might be worth dedicating an Off Kilter edition to putting a little more meat on the bones.
Blending empirical data with my own experience I’ve found the following to largely hold true:
The 95:5 rule of thumb broadly holds in B2B environments, with the nuance that there is typically more room for cross-sell growth within B2B relationships. However, the mistake large corporations tend to make, especially those with a strongly sales-driven culture, is to think they can cross-sell their way to success. As a result, they tend to over-resource sales teams focused on growing existing relationships and under-resource marketing activities focused on new customers at the top of the funnel. Startups also tend to fall into the over-resource sales and under-resource marketing trap, but for different reasons. Here, it’s often that they’ve pitched investors with a massive Total Addressable Market (TAM), which they then cover thinly with sales for optics reasons, and then marketing gets whatever funds are left over, which spreads marketing so thin it becomes measurable in nanometers.
When marketing is systemically under-resourced, trade-offs happen. Because sales cultures are so strong, they demand short-term support as a priority, often euphemistically labeled “sales enablement,” which in many organizations is simply an excuse to push the cost of supporting the sales org with sales materials onto the marketing dept. Because marketing resources are being spread so thin, efficiency metrics rise to the top, and finance starts probing how marketing spends every cent. As a result, short-term, online, transactional activities that are easily measured get prioritized. Not because they perform better, but because efficiency metrics like ROI can be reported to finance to prove the meager funds made available have been spent wisely. This puts marketing leadership into a Catch 22, where they don’t have enough resources to be effective, yet because they’ve been given so few resources to play with, they have to prove at every instance that they’re using whatever they have been given, efficiently.
As a result of the above, three things happen. First, because resources are so limited, there’s close to zero attempt to build longer-term brand equity, which Jonathan quite rightly equates to establishing a relationship. Second, because there’s tremendous pressure to spin the short-term transactional hamster wheel faster for the same budget, it tends to drop the quality of what you’re doing precipitously. Third, because of all the pressure to deliver sales, there’s no resources left for basic foundational activities: No customer research, no brand tracking, and no insights into what matters beyond what the sales team says is important, which in turn leads to a fundamental lack of marketing strategy.
Because of a lack of resources, and trade-off decisions that lead to a fundamental lack of marketing strategy, marketing underperforms its potential and is viewed as a non-strategic business function. As a result, efforts are put in place to “transform” marketing to become even more efficient, less wasteful, and do a better job of supporting all of the hard work being put in by a sales team that’s now finding it harder than ever to find and then close leads.
Unfortunately, because the real problem is a lack of resources begetting a lack of marketing strategy, begetting ineffective tactics in the interests of efficiency, “transformation” efforts become little more than a gaming of the metrics. As a result, things like “qualified leads” become anything but. Instead of a carefully screened prospect, you’re now more likely to have a sales team overwhelmed with low interest, low likelihood of conversion, prospects the marketing team have been grubbing around on the floor at the bottom of the funnel to find.
These problems then get exacerbated because you’re not alone, and there’s now an army of transactional, short-term oriented, brands all competing with each other for attention and for business. And, critically, they’re all following the same tactical playbook you’re following, which overwhelms the market with tactics that are A. Becoming less effective as more people simply choose to ignore them, and B. Becoming more expensive since you and all your peers are now competing among yourselves to execute the same tactics, at the same time, among the same audience.
Meanwhile, we know that B2B buyer behavior is often mis-represented (best-case) or not represented at all (worst-case) in these decisions that have been made about how best to use scarce marketing resources.
In my experience, having interviewed the customers of my clients for over two decades, two things hold true for B2B buyers. First, they are looking for partners not vendors. The way they describe the difference is that partners seek to make their customers succeed first, and sell them a product second, while a vendor just seeks to sell a product come what may. Second, buyers are rarely buying solely on the basis of product features or performance. They’re cognizant that product and technical leadership often changes hands more often than they intend to switch partners. As a result, they identify a short-list of potential partners they believe all have a good enough product, at which point they make the purchase decision on all of the other, non-product factors - like service quality, domain expertise, product roadmap, security, brand reputation, uptime, etc. This 100% reinforces Jonathan’s point that a large percentage of B2B buyers are prioritizing the relationship and not the transaction, even if the evidence is implicit.
So, what can we do about this?
Well, it starts with a realization within sales-driven cultures that for marketing to send better quality leads to sales, then it first needs to be re-engineered for effectiveness rather than efficiency. While the following is over-simplified, marketing needs the resources and remit to: A. Hire a strategic leader for the marketing function. B. Do the research and insight gathering to understand the buyer landscape, its segments, their needs, and importantly, how they buy. C. Increase and then better deploy scarce marketing resources to balance both short and long-term priorities. Which, in practice, means increasing the resources available for brand-building. Re-labeling this balance, we might refer to it as “pre-purchase relationship building at scale, which we will then harvest to grow the business.”
I’ll leave you with these stats, which exist in various forms: Somewhere in the region of 70%+ of all B2B buying decisions are made before the prospect speaks to anyone in sales. The most common number of vendors on any RFP list is 3. The majority of buyers never trial more than one vendor before making a purchase.
A huge degree of buyer decision-making happens without our knowledge, and without our active involvement. Thinking we can skim off enough of the “active participants” in any market through feature-driven “performance marketing” alone is a myth: They’re too hard to identify accurately, it’s expensive because everyone else is trying to target them too, and the overwhelming point of purchase assault such playbooks create means they’re being trained to ignore these tactics completely. If you’re doing this, then if effect, you’re paying more for less when what you’ve probably been told to do is to achieve more with less.
The only business function that exists to exploit this market reality by establishing pre-purchase relationships at scale is marketing. Sales can’t do it alone. So, in order for sales to be more successful, it needs a strong, well-resourced, marketing leader working alongside it.
Because so many B2B categories have become so tactical, so feature-driven, and so lacking in buyer insight, I’ve noticed that even small changes can make a big difference:
Clearly positioning the company relative to the value it creates for clients and how it differentiates from the competition
Honing the messaging down to the few, key, identified needs of important buyer segments
Presenting the brand distinctively, and uniquely relative to the competition
Having the strategic positioning of the company and insights into the customer beget a marketing strategy that drives the choice of tactics, rather than the other way round.
Introducing brand-level metrics to the sales funnel conversation to prove out the linkage between having a stronger brand (pre-purchase relationship) and transactional success.
Fundamentally, this isn’t rocket science. But in a world where so many are getting it so wrong, the lack of focus on marketing as a driver of pre-purchase relationships, and thus growth, in the B2B landscape is increasingly a very exploitable competitive weakness.