Monday, September 15, 2014

Social Buying: The Importance of Trusted Networks during the B2B Purchase Process

Everyone's hot to leverage social selling and social marketing. But what about the other side of the equation? Do B2B buyers use social media for purchasing support?  An IDC study says yes! And contrary to common assumptions, it’s the senior executives who are most enthusiastic.

The most senior buyers are the most active social media users. IDC's Social Buying Study, completed in February 2014 in collaboration with LinkedIn (Slideshare version) studied the online social practices and preferences of B2B buyers. The study concluded that 75% of the B2B buyers studied and 84% of C-level/vice president executives use information from social media and interaction on social networks to make purchase decisions. I'll be talking about this study at the sold-out Sales Connect conference later this week.

Social buying improves decision confidence.  The operative benefit in social buying is the ability to access trusted networks to increase confidence in high-stakes decision making. When asked about their agreement with various statements about social media, respondents gave these top three answers:
  • They want to use vendors that have been recommended by people they know
  • They want to work with sales people who have been referred to them
  • Their social networks are critical for checking references

Social media make accessing trusted networks easier. Buyers have long trusted their offline professional networks for this purpose. Online social networks improve access to trusted existing networks and open up networks that more easily extend beyond traditional boundaries. The bigger the buying decision, the more important social networks become. The study found that social buying correlates with buying influence. The average B2B buyer who uses social networks for buying support is more senior, has a bigger budget, makes more frequent purchases, and has a greater span of buying control than a buyer who does not use social networks.

B2B buyers use different types of social resources at different stages of the decision-journey. It's important not to lump all social media into one big stew of a category. "Social" is a media attribute that enables peer-to-peer audience participation. Some media are highly social and others not at all. 

  1. Early Stage: when buyers are exploring whether to solve their problem, they favor news-type resources. Industry-specific media are #1, internet search (a socially-curated information service) is #2, and microblogs like Twitter are #3.
  2. Middle Stage: when buyers are evaluating solution options, 3rd-party experts become #1, industry-specific media are #2, and internet search is #3.
  3. Final Stage: Online professional networks (e.g., LinkedIn) are buyer's the #1 preferred information source in the final stage of the purchase process, when stakes are highest. This final stage is the riskiest stage because by this time, buyers are teetering on the brink of commitment where they will soon reap the benefits of a great decision or plunge into the abyss.  It's at this point that they most need the confidence advice provided by their professional network. Online network services like LinkedIn make this easy. Third-party recommendations are #2 and topic-specific communities become #3.
ESSENTIAL GUIDANCE
  • Relationship building, referrals, and recommendations are shifting online, so make social marketing and social selling a priority. Social marketing and social selling are not responsibilities that can be relegated to a special team low in the organization. Marketing executives should consider social aspects to be an integral attribute of all campaigns. Sales professionals and others in key customer-facing roles need to be active on social networks. At best, companies will miss an important opportunity to connect and at worst could incur real damage.
  • Respect the context of social interactions. Understand that when using the digital channels, buyers are seeking access to their trusted networks for information to increase decision-making confidence. Social channels are not simply a new avenue for spamming or cold-calling. Instead, each individual must earn his or her place within the trusted network of people that buyers will invite to participate in the purchase decision.

Sunday, August 17, 2014

Organizational Tips for Leading the Marketing Transformation

Do you ever feel overwhelmed by the marketing transformation? You aren't alone.  An IDC analysis of tech marketing staff changes since 2009 reveals that CMOs have had to squeeze traditional staff functions to accommodate five new roles: analytics/business intelligence, marketing technology, social marketing, sales enablement, and campaign management. In 2013, these new five roles collectively made up 14% of the total marketing staff.

IDC invited organizational change expert, Dr. Rick Mirable, to advise our clients on insights for leading more successful organizational change initiatives. Here are some of the tips that Dr. Mirable, who has more than 20 years of diverse business consulting and academic experience, offered:
  • What we believe about change determines how we will respond to change. People hold beliefs about the capability of both company culture and individual people's ability to change. Good change initiatives raise awareness of these biases.
  • Successful change initiatives require that leaders be included. It's not only individuals deep in the organization that need transformation, but leaders must also be role models for the change they want to see.
  • People resist change for many reasons. Change can threaten our sense of security (What will happen to me?) and our sense of competence (Can I learn new skills?). People may worry they will fail. They may not understand why change is needed. Companies may inadvertently reward people who resist change by penalizing people who try new things and fail.
  • Some resistance to change comes from unspoken resentment. Companies must allow for expression of the relevant "inner conversations" that people have with themselves about the change — views that are not explicit to others. Resentment is like dirty laundry — if you don't get rid of it eventually it starts to smell!
  • Some change initiatives fail simply because the organization isn't ready. Assess your readiness and then bring those areas found lacking up to speed before embarking.
  • The communication portions of most change efforts are weak and not consistent over the long haul. The communication must be open and bidirectional. Messages and goals need to be regularly repeated and reinforced.
  • Company culture is essential to sustaining success over time. One cultural attribute proven to accelerate change is the empowerment of individuals to make decisions that further the change goals. It is a best practice to ask people what they want to do (and ask for management permission to do it) rather than telling them what to do. This practice encourages innovation and accountability and drives change deeper in the organization.
  • Don't confuse "movement" with progress. When you get off the freeway during a traffic jam, you may be able to move faster; however, that movement doesn't guarantee that you are actually moving toward your destination or will get to it any more quickly. IDC notes that marketing teams that measure activity rather than outcomes are making this error.
  • Create circumstances for people to motivate themselves. Motivation can include extrinsic rewards such as money. Proven to be even more effective are intrinsic rewards — challenge, learning, responsibility, contribution, and career path advancement. Intrinsic rewards tap into the power of people's passions. Companies are advised to structure people's work so as to allow passion to surface.
  • Reduce resistance by creating a "burning platform." Clarify the risks and benefits of the change and involve the collective wisdom of the group. Give people a role in the change. Involve a person's "head" and "heart" as well as the "feet" of required actions.

Sunday, June 29, 2014

B2B Audience Segmentation Strategies that Work

As companies develop buyer-centric communication, one of most important questions is - how do we effectively group buyers into segments? We perceive that somewhere between the one-size-fits-all dinosaur and the unicorn-like "market of one" exist segmentation strategies that work better than others. But which ones? The secret is discovering self-identifying groups.
 
Great segments are built around groups that have naturally formed and are already connected.
 
For B2B marketers, the most effective audience segmentation strategies are vertical industry (e.g. hospitals, banks, retail), job function (e.g. CFO, head of HR, VP of Analytics), and geography (e.g. location, language, culture). In some cases, communities of interest can also be valuable. Communities of interest evolve around passions and may exist only online.  Examples of communities of interest relevant to B2B marketers may include those interested in security or privacy or a tech company's installed base. These attributes are ones that buyers will not only easily recognize about themselves but tend to be the stimulus for group formation.
 
Using self-identified groups as a primary segmentation strategy has two huge benefits.
  • Content will be more relevant and can be leveraged and streamlined. Self-identifying groups such as the ones described above respond to the same value propositions. They tend to have similar opportunities and/or problems. They will have similar compelling reasons to buy and are served by similar solutions. They tend to have similar business models, organizational structures, and environmental conditions. They share a common vocabulary. They ponder the same questions. They read the same editorial. They understand the same stories; respond to the same examples and analogies. They react to the same warnings. You can create highly relevant, effective, content and sales messages for these groups and that content will work hard.

  • The social network will market and sell for you. People with the attributes described above (vertical industry, job function, geography, communities of interest) are connected in social networks.  They go the same trade shows and recruit each others' executives. They respect the same experts and analysts and use the same suppliers. Social media has revealed to the world what we all know from our own buying experience - people rarely make big decisions by themselves. We seek help and advice from those we trust. We look for stories about how "people like me who have had this problem" have succeeded or failed. We collaborate with like-minded adventurers to try something new.  Imagine your message as a small marble. Throw your marble onto a Kansas wheat field.  Throw another. What are the chances that those two marbles will hit each other? Now imagine throwing your marbles into a shoe box. They bounce into one another with the slightest jolt.  Already connected groups create an echo chamber that can dramatically extend your own outreach effort
 
Consider company size, buying role, and risk profile as secondary audience segmentation strategies.
 
  • Buying role and risk profiles are very useful but used alone are insufficient. Within the overarching audience segmentation strategy, you may want to create sub-segments such as different kinds of buyers and influencers (e.g. financial buyer, technical buyer, decision-maker, researcher, or advisor) or risk profiles (e.g. early adopter, majority, conservative).  Content will be less relevant and you will get virtually no support from the social network. Both of these segmentation strategies are helpful. Buying role helps identify the different objectives and questions that must be answered by content. Risk profile is useful for content tone.  For Early adopters tend to respond well to opportunity-oriented messages ("look how great you can be!") whereas conservative companies tend to respond well to risk-avoidance messages ("look how much pain you won't feel!"). However, unless you are a very large company with brand dominance and a horizontal solution, these strategies are less effective by themselves for winning new business than those described above.

  • Company-size segments help sales but not marketing. Dividing buyers into tiers defined by company size such as enterprise accounts or small and medium sized business (SMB) may be a useful strategy for some business decisions. It informs sales management tasks such as territory definition, quota setting, and sales methodology selection. Company size is also useful for pricing strategies. However, Wal-Mart and GE have little in common other than size and complexity. However, company size provides almost no support for audience messaging.
 
For B2B audience segmentation strategies, your ideal group is the triple crown of vertical, functional role, and geography, or in some cases, communities of interest.  Your particular situation may have some unique requirements.  However, whatever segmentation approach you consider, make sure it passes the litmus test – self-identify as a group that experience similar problems and shares a social network.

Tuesday, June 17, 2014

Marketing to the Data Driven Customer


Customers with digital DNA expect data driven value
The digital native generation is bringing new expectations to brand relationships. They are mobile first, crowd sourced, and data savvy. Their first and most frequent interaction with your brand will be digital and mobile. They find out what's cool, what's trending, and what's most likely to work best for them from their social networks. They don't have emotional attachments to brands because the product is compelling or the advertising is cool. Their emotional engagement comes from unexpected insights that make them more successful. This is the new basis of customer loyalty, advocacy, and lifetime value.

Of course you still need a compelling product and cool ads (or messaging.) But once the prospect is a customer, continual engagement depends on over the top data driven insights. It's no longer enough to just sell the hammers and saws and let the buyer go build their house. You need to monitor how they are using the hammer and saw. You need to deliver success by guiding their use of your product based on the behavior of your most successful customers. You need to leverage your position as the center of your customer universe to share best practices quickly and efficiently. The only way to do that at scale is through data.

Data Ownership vs Data Stewardship
In between the lines, you should be hearing a new philosophy with respect to customer data. Even though legally you "own" it, the data driven customer expects you to act as a data steward. You must treat their data as an asset to be used for their benefit, not just as the basis for driving revenue. Everything you provide to your customers should be designed to bring data back. Your customers should learn that the more data they provide, the more value they get in return - without negative side effects like having their data sold to an irrelevant ad network. Give to get and maintain the trust.

This has tremendous implications. Not only for marketers. Data marketing requires coordination with product development, IT, finance, fulfillment, point of sale, customer support, consulting services, sales. All these groups interact with customers and capture data on different aspects of their behavior - product usage, purchasing, problem resolution, planning, advocacy, etc. They all need to be understood to identify the most successful customers and the traits that drive their success. You can create tiers of services based on the level at which customer provide data. You can create cohorts of customers that exclude direct competitors. You can support exchanges within your customer ecosystem that enable strategic accounts to benefit from preferred peers. You can be extremely creative about how you structure your data marketing services.

The message is that in a world of shrinking product cycles, cheap knockoffs, and copycat services, data marketing is the new source of differentiation. No one else has the data you (should) have on how customers can be most successful with your products. Use it to attract and retain the best and leave the rest to your competitors.


To continue the conversation on data marketing and the data driven customer, contact me: gmurray (at) idc (dot) com.

Wednesday, May 28, 2014

Call For Participation - IDC's CMO Advisory Service's 2014 Tech Marketing Benchmark Survey

It is that time of the year - IDC's CMO Advisory Service is in the field with our Marketing Benchmarks Study. This is our 12th year conducting this study that is used by leading marketing organizations to benchmark their marketing spend and organizational structures. Now it's your chance to join in this important research; I would like to offer an invitation to participate in this survey. 

Below are the essential "need to knows" around our survey and further down I'll dive into all the great value of benchmarking your marketing organization:

What are the benefits?
  • Complimentary copy of our 2015 Marketing Investment Planner to benchmark your company's marketing data against industry data.
  • Receive an invitation to our exclusive client telebriefing held by IDC Analysts.
  • Access to IDC's industry standard marketing taxonomy.
What is needed? 
  • Email me (smelnick (at) IDC (dot) com) to get our survey instrument and taxonomy.
  • A "lead" marketing executive with access to marketing budget and staffing allocations. 
  • Complete the survey by August 1st.
What is the Quality of Data and Confidentially?  
  • This is the 12th year IDC has fielded the Tech Marketing Benchmark Survey and will include participation from many of the 100 largest tech companies - this depth and expertise is unmatched
  • All responses are 100%, no questions asked, confidential. We take this part very seriously.  
Bonus to all Participants
  • All participants will be eligible for our 2015 Chief Marketing Officer ROI Matrix and will have access to their placement on the Matrix. A great way to easily compare your marketing progress against the rest of the industry's. 

Need More Information: View this excerpt from Kathleen Schaub's excellent post, IDC Tech Marketing Benchmark: Behind the Scenes. It explains all the intricacies (and value of benchmarking).
Why do companies benchmark? A benchmark provides context for decision-making. You spend a million dollars a year on social marketing. So what? If your CEO asks you this question, what will you say? Tech marketers tell us that they like to benchmark for the following reasons:
  • Improve the quality of annual planning: Last year’s program budget and gut feelings are no longer sufficient input
  • Gain insight into critical trends: Learn what industry leaders and competitors are doing – and how you stack up
  • Reallocate costs: Identify areas of overspending and opportunities for better value
  • Transform with confidence: Answer questions such as how much to invest in new areas like social marketing or how should I re-organize my department?
  • Drive with data: C-level executives increasingly expect marketing leaders to manage their business with the same level of operational excellence as other corporate functions.
  • Get an independent view: Benchmark data provides IDC analysts with a wealth of information that make guidance to clients personalized and accurate guidance
Feel free to reach out and let's have a discussion whether it's the right time for your organization to participate!

Email me at: (smelnick (at) IDC (dot) com) or find me on twitter @SamMelnick

Monday, May 19, 2014

Are Ad Agencies Keeping Pace with Marketing's Massive Digital Uptake? (Hint: Maybe Not)

Today, marketing's equivalent to the Brady Bunch's "Marcia, Marcia, Marcia!" just might be "Digital, Digital, Digital!" This is with good reason. Since 2009, digital marketing spend within large B2B tech companies has grown, and is growing, at an enormous rate. As you might have seen, IDC expects the entire tech industry to pass the 50% mark of digital spend vs non-digital spend by the end of 2016! This is the client side, but what about on the agency side, are these important partners keeping pace with their clients? At the end of April, Ad Age published their most recent "Agency report", it shows the agency industry's digital revenue over the past 5 years. While, agencies' digital revenues are growing and, as a percentage, these revenues are comparable to what their clients are spending on digital - the lack of substantial growth for agencies' digital revenue is notable. 


As seen from the image above, 5 years ago agencies were already generating over 1/4 of their revenue from digital, where as tech companies were spending only 13% of their budgets on digital. Since then, these same digital marketing budgets have grown at a CAGR of approximately 21% - agencies' digital revenue have grown closer to a 6.5% CAGR, a third the rate of tech marketer's digital budgets. This begs the question, are agencies keeping up with digital innovation? Does the agencies' slower digital revenue growth give us a glimpse into the future where in-house marketers are the digital experts?

Below are two comments that I think help parse out this story:
  1. Chapter  7 in Scott Brinker's (AKA: @chiefmartec) marketing book, A New Brand of Marketing, "From Agencies to In-House Marketing",  lays out the in-house vs agency shift perfectly. Traditionally agencies' bread and butter is within the advertising campaign - as advertising has moved digitally, ad networks and ad-tech have continued to mature allowing practitioners to work directly with these networks and/or utilizing programmatic ad buying to optimize their spend. In a sense, cutting out the middle man (agencies). This might help explain the large difference in growth between digital revenue growth at agencies and digital spend from the practitioner. While companies are spending more dollars on digital, it is more of a do-it-yourself approach.
  2. Anecdotally, through my conversations with clients and marketing executives, on more than one occasion I have heard marketers bringing core agency work internal. The two main reasons for this action are:
    •  Scope: For marketing executives who are trying to build a full scale demand engine or attribution models, they are finding it very hard to identify an agency partner who can deliver this vision from start to finish, particularly with expertise across the entire project. (A fair caveat is very few companies can do this internally!) They are still utilizing agencies, but typically for projects around high level strategy or vision and/or very specific tactical portions of their larger campaigns.
    •  Speed: To truly compete digitally, marketers have realized that speed is an asset. From content creation, to adjusting advertisements in real-time and to making sure the latest and greatest technologies are being tested and used, speed is a factor. Advanced marketers are often realizing by bringing many of these activities in-house, it is much easier to increase speed - it is also much easier to retain the talent that can execute in the manner necessary to succeed.
The above instances and the overlying data are something for marketers to be aware of and agencies to be concerned about, but, like with most changes this is not a black and white scenario. With agencies, similar to most marketing organizations today, it's about reinvention. My colleague Gerry Murray, outlines some of this reinvention that IDC expects to happen within the agency (or more specifically marketing services) world in his latest blog post, Marketing as a Service (MaaS): The next wave of disruption for marketing tech. Ultimately, the vendors that continue with business as usual, relying on media buys or traditional agency/client relationships, risk stagnant digital revenue growth and an outdated offering.

What success are you seeing within your "in-house marketing team" and how are you continuing to leverage your agency partners? I would love to hear your opinion in the comments below or by reach out to me on twitter @SamMelnick

Sunday, May 18, 2014

Marketing as a Service (MaaS): The next wave of disruption for marketing tech

Marketing technology has seen a remarkable innovation boom over the past 10 years — so much so that the market now boasts over a thousand vendors that IDC organizes into more than 75 categories. IDC believes this structure is unsustainable and over the next three years the forces of consolidation will exert fundamental changes in the way large enterprises provision marketing infrastructure and from whom they provision it. The marketing technology market, like much of the IT industry, will move to a cloud based service model which IDC calls the "third platform." As the illustration shows, more than 90% of the growth in the IT industry will come from this model.

For marketers, the third platform means the advent of Marketing as a Service (MaaS), which will have transformative affects for IT, IT services, and creative agencies. Key indicators that MaaS is on it way include:
  • Unsustainable complexity: Point solutions have come to market independently leaving it up to marketers to assemble them into rational infrastructures. This is a highly inefficient market model for buyers and sellers.
  • Transition to platforms: The consolidation of point solutions into platforms has already begun. Many noteworthy acquisitions have been made by major vendors such as Adobe, IBM, Oracle, salesforce.com, and SAP. However, this phase of market development will not last long as markets move rapidly from platforms to "... as a Service" models.
  • Digital and creative coming together: AdAge recently named IBM the number one global digital agency in the world. IBM is rapidly hiring from the agency world to build out its creative services. Adobe has deep and long standing technology partnerships with many top agencies. The agency world needs a value proposition that will allow them restore margins and regain strategic relevance.

MaaS includes the fundamental technology, IT services, and creative services that marketing needs in a bundled offering. Bringing these services together delivers significant value to CMOs who have two key sources of pain: On one hand, their agencies cannot effectively execute omnichannel campaigns nor deliver real time attribution reporting. On the other hand, technology has added a great deal of cost and complexity to their operating environments. MaaS enables them to outsource much of the technological complexity, pay for it out of their advertising budgets and get better integrated marketing services from their top agencies. For tech vendors it means gaining access to the advertising budget which dwarfs marketing IT spend by orders of magnitude. As a result, IDC expects this model to be a major route to market for marketing technology in the enterprise segment. It is therefore an urgent action item for tech vendors, system integrators, and agencies — partner now or lose a major channel. 

For more information on this important trend please contact me at gmurray(at)idc(dot)com.