Buyers want their suppliers to use these channels. Cone Inc.’s 2009 Social Media in Business study found that 93% of business buyers believe all companies should have a presence in social media and 85% believe social media should be used to interact and become more engaged with them.
“The value of social is in building stronger, more connected relationships that extend beyond the traditional face-to-face kind,” says Adam Christensen, manager of social media at IBM. “It’s now more of a continuing conversation, so that when two people do actually get together again…the relationship is better.”
CHANGING CHANNELS
B2B marketing has been conducted pretty much the same way for decades. Direct sales forces followed up on leads generated by trade print advertising, trade show exhibitions, direct mail and telemarketing. These channels were always expensive and have become less effective than they once were.
Let’s take the corporate technology executive as an example. Until about 10 years ago, the typical IT manager’s mailbox bulged with print trade magazines. It was not unusual for IT executives to have a stack of unread magazines in the corner of their offices (Paul still remembers with a chuckle the IT manager who referred to his weekly trade magazine deliveries in a metric he called “stack feet.”) and to take piles of them on plane trips for rapid processing.
This was a highly wasteful system. Technology companies could pay as much as $30,000 for a full-page advertisement that might be seen by only a tiny percentage of the magazine’s readers in any given week. It was impossible to communicate the value of a product in this format; advertisers mainly relied upon quick slogans borrowed from the consumer sector that they hoped would spur a phone call. Lead quality was poor and sales cycles long and arduous.
It’s not surprising that the technology sector was one of the first to discard print advertising. Today, only a handful of technology magazine still exists in the US and their average sizes have shrunk from hundreds of pages a week to a few dozen. In 2009, the trade publishing sector was the single largest declining print market, with ad pages contracting 28%, even after years of decline. The collapse of that industry was dramatized in November, 2008, when PC Magazine, which once generated more than $100 million in annual revenues, announced it was exiting the print business and going fully online.
What explains this dramatic turnaround? Quite simply, it’s market efficiency. Business buyers are looking to make decisions as quickly and intelligently as possible. Searching for solutions online is far more appealing to them than relying upon the serendipity of encountering an ad in a magazine or seeing a flyer in a mailbox. It’s not surprising that Americans over the age of 15 conducted 22.7 billion searches in December, 2009, according to ComScore. Buyers don’t want to wait.
Marketo reported that 93% of B2B buyers use search to begin the buying process and Forbes Insight reported that 74% of C-Level executives call the Internet “very valuable” while 53% said they prefer to locate information themselves. Nor is it shocking that direct-mail spending is expected to decline nearly 40% by 2014. Buyers’ information discovery habits have changed forever and search is the beneficiary.
But it isn’t just search. Business buyers have been saying for many years that their most important source of information is each other. Research in early 2010 by Genius.com and DemandGen Report found that 59% of B2B buyers engaged with peers before making a buying decision, 48% followed industry conversations and 44% conducted anonymous research among a select group of vendors. Forrester Research reported that more than eight in 10 IT decision-makers said word of mouth recommendations are their most important source when making buying decisions. Countless other surveys have reached the same conclusions stretching back more than 30 years. Business buyers actively seeking out others like them because they believe they will get the most direct, untarnished advice.
Social media enables this dynamic with unprecedented speed and flexibility. It empowers individuals to share their experiences directly with each other and without the filters of corporate PR departments and lawyers. People are more honest and direct when speaking with their peers, which is one reason why feedback from social networks is more compelling than packaged case studies. As the number of channels multiplies and more participants come online, the quality of information improves, a phenomenon knows as the “network effect.”.
Today, prospective buyers no longer need to conduct searches. They can ask questions directly of each other via Twitter, Facebook and LinkedIn. Response is nearly instantaneous and, because each message is tied back to an individual profile, participants have a high degree of confidence in the quality of the information.
Andrew McAfee, principal research scientist at the MIT Sloan School, fellow at the Harvard Berkman Center and author of Enterprise 2.0 has gone so far as to raise the possibility that a new kind of search is emerging based upon the ask-and-answer metaphor. So now we can not only search the Web for others’ experiences, but we can ask questions directly of an anonymous or semi-anonymous group and get back useful information.
“If a customer in the chemicals industry is having a challenge and wants to know best practices for distribution of chemicals through a supply chain, he or she can turn to another chemicals customer in our ecosystem through our [online] communities and learn,” says Mark Yoltan, senior vice president of the two-million-memger SAP Community Network.
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Paul, Eric – your first chapter inspired a lot of thought, and I would appreciate the chance to have a conversation offline.
My (lengthy) comments are below, and you can reach me at ghalliwell@netprospex.com.
It’s a great starting point. This topic is overdue for all the reasons you mention. That $80bn B2B marketing spend brings enormous clarity to the fact that this is hardly a backwater. I agree with most points, have questions on some and think there some other interesting things going on here that you might also consider.
I like the story of B2B marketing momentum based around products of greater value which in comparison to B2C certainly have more objectivity. I don’t see this as an either/or though. I think it’s both. Most of us are very turned off by unimaginative marketing hyperbole that talks down to us and rigid corporate websites. B2C does navigation and tone very well, and it’s the B2C model to follow as an evolving set of B2B marketers.
Many haven’t yet figured out that poking around the edges in navigation bars is not where the user’s attention is, it’s just a reflection of Microsoft’s navigation system. Users prefer information and decisions presented to them in the centered simplicity of the iPhone and iPad (which has almost all but replaced my PC) and the friendly, personable tone of Apple.
Paradoxically, while your points are convincing that B2B and B2C are different, there are similarities on some planes which I think are worth digging into. In the last 10 years, empires like Salesforce.com have been built on the principal of selling to individual salespeople as a way to storm the beachhead of a large corporation and gain that traditional enterprise sale. Salesforce has shown you can push back some pretty big players like Oracle, SAP and Microsoft, when you back into a market by delivering value to end-user business person who need to get their job done at a price they can afford. Another interesting convergence is that B2C companies are starting to market heavily to B2B. There are lots of retailers out there from clothing to food who use their internet presence to open up scalable markets to corporate buyers. In this sense the two worlds are becoming more fused.
The fact that over 80% of B2B businesses have a greater corporate social presence than B2C is astounding. Our own mapping of the social networks of over 14 million business executives show that just under 40% of the workforce are members of one or more of the top 10 social networks. There’s a good summary in the Huffington Post that maps the top 50 corporations in this regard:
Link to Huffington Post article: https://www.huffingtonpost.com/2010/05/18/companies-social-media-st_n_580609.html
While B2C buyers might be more subjective as you suggest, with social media, B2B marketers cannot dismiss the “merely subjective” any longer as social is all about the inter-subjective of relationships and culture. The hidden issue here is that relationships impact us in ways we can’t control. That’s huge and it’s the unknown that B2B corporations needs to come to grips with. I think you covered this nicely when you point out on the corporate successes like Dell are based on the fact that people want to speak with people, not brands and the trade off will be to accept that to err is human and we will have to accommodate both. I think you are saying that the virtual world is beginning to look very much like the real world…which makes a lot of sense.
I think the section “To Err is Human” is very strong and a key piece to the puzzle. As you point out with Dell, social can put personality back into the the business equation in a scalable manner and the acceptance that we people make mistakes and these can be forgiven in this trade off is a powerful argument. Its not trivial as I found at a recent conference of social media which I wrote about for iMedia Connection recently.
Link to iMedia Connection article: https://blogs.imediaconnection.com/blog/2010/06/21/we-can%E2%80%99t-king-canute-the-social-media-tide/
One point I’d like to disagree with is that buying made by groups means longer cycles. If you look at the software industry, prices have dropped with affordable end-user subscriptions. I agree that more people confer around a decision that may be linked between departments with the purchase of software, but IT is rarely in the mix, and the risk in the initial expense has effectively been removed with end-user pricing and freemiums. The risk is now about opportunity cost. We know there are solutions out there, as you point out we need to understand the value quickly and obfuscation with glitz isn’t helpful. I think we are seeing slightly shorter cycles because in a world that is increasingly plug and play due to cloud computing and platforms. Also, business can’t slow down our decision making processes…the market simply won’t allow it.
The section on changing channels is really interesting and the rise of search is interesting. One thought here us that mention of email is warranted. B2B direct mail died over the past 10 years not because of social media, but because of email. Email was our first electronic social media, and I think B2B marketers have learned a lot in the past decade, and while push is not relevant across social networks, we have learned to speak to customers in email, by increasingly dialing back the direct sell and providing learning opportunities about the latest tools so business people better understand their options for tools that improve efficiency.
In regards to the changing rules section, with the Adobe systems example, consider the backdrop of the platform war between Adobe and Apple. Adobe looks like it overplayed its hand in believing Flash was the ubiquitous internet platform. With Apple doing an end-run around this with the iPad, I think publicity, good or bad is about Adobe’s only recourse. Sorry…Mr Brimlow looks like a plant to me. Though that in itself is lesson enough in this new world. I’m not convinced that the guys at Adobe are on their game by any of this.
I think your premise that the objective (scientific) B2B marketing contrasts starkly against the subjective (emotionally driven) B2C marketing is interesting and has some truth, but doesn’t social mess with that whole equation? The subjective is defined as what the individual might think of something, and has always been easily dismissed. But we can’t underestimate the inter-subjective that is massive in this new social world. When making a decision, only 20% of that decision is based on the information. 80% is based on where the information comes from. That’s why the inter-subjective flips the equation in B2B social marketing and is why the subjective and the inter-subjective and the emotional response to our companies, employees and brands is now really important in B2B.
I think relationships are more important in B2B purchase because of the value issue you start with at the beginning of the chapter, and these relationships extend beyond co-worker and vendors, they extend across the network of colleagues, bloggers and influencers across the side range of our experience.
James Burke’s book “Connections” points out that information and influence travel only 3 degrees but that this is measurable and predictable. Understanding the social map of business users is going to be critical to the next steps we take. As Burke point out, it’s not just the nodes in our relationships that are important but as far as creativity is concerned, it’s the nodes that connect into different networks that are the dark matter in this whole equation.
Again.. would love to chat offline, and I welcome your thoughts and response.
Cheers,
Gary Halliwell
CEO – NetProspex
ghalliwell@netprospex.com
I think relationships are more important in B2B purchase because of the value issue you start with at the beginning of the chapter, and these relationships extend beyond co-worker and vendors, they extend across the network of colleagues, bloggers and influencers across the side range of our experience.