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.”
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.