B2B is estimated to be a $1 trillion global market opportunity. A recent study by NetApp and Zinnov shows that between 2014 and 2018, the number of B2B startups in India more than tripled from 900 to 3,200. B2B startups grew from 26% in 2014 to 43% in 2018 as a percentage of total tech startups. There has also been an exponential growth in venture capital funding, a whopping 364% in five years*. Indian B2B startups have already raised more funds in the first five months of 2019, around $3.35 billion, than in all of the previous year. Of the 23 Indian unicorns, 6 are in the B2B space. There are several reasons why the B2B space is attracting investors, which primarily fall in three buckets – ability to start small and scale, management talent and global scope. “The lure of Indian B2B startups lie in their potential to disrupt specific areas of large industries by building tech-based enterprise solutions that can be applied at a global level. **” It is therefore important to support this growing ecosystem with insights to help them successfully leverage marketing to grow. The purpose of this essay is to summarize the 5 principles that B2B companies should follow for effective marketing to drive growth.
Key takeaways from the Report:
The most important thing about this report is that it is not Trends but rather Principles*** . In several cases, the Benet and Field principles show that what B2B Marketers are actually doing is the EXACT opposite of what they should be doing, based on the recommendations in this report! The first takeaway is that following what is “trendy” doesn’t actually make it good for business! Let take a quick look at the 5 principles:
1. Heuristics is key to B2B Marketing: Many B2B campaigns are focused on enabling the buying cycle with rational advertising i.e. relevant and functional product information. B2B marketers often don’t think appealing to emotion makes sense, but this assumes that B2B buyers aren’t human! The human brain looks for mental shortcuts, also known as heuristics, when making decisions. Benet and Field use the phrase “mental availability” which is based on the rule of thumb, given a choice between several options, people tend to prefer the one that comes to mind most easily. Think of “No one gets fired for buying IBM.” Campaigns that aim to increase the firm’s share of mind and make them more famous, see better business results. Put simply, it’s time to get emotional in B2B.
2. Hunt or die: There are 3 types of marketing strategies: acquisition, loyalty/retention and the combination, which we call reach. Which do you think is the best strategy, of course, like anything, the combination? But which do you think is the second best? Many in B2B assume its mining your existing customers, because that’s what sales asks for right? It is actually acquisition marketing. Brands who talk to the most people in the market (customers and non-customers), most often, tend to have higher mental availability than their peers.
3. Advertising for growth vs. awareness: Most marketers think of advertising for when a company is new, i.e. to drive awareness. In B2B, companies can actually do quite well without advertising in its first few years because it has a sales team, decent products at the right price and word of mouth and repeat business can sustain them. B2B actually needs to think about advertising when organic growth slows down and they have captured the low hanging fruit. Targeting does not have to be mass but should include those who are not yet in the buying role now but whose career paths will lead them there. These Buy “later” customers are different but as important as Buy “now” customers and need a different marketing mix.
4. From defense to offence: Many marketers assume that if they focus on performance marketing and digital instead of advertising, they will be more relevant to the business. This is partly true. These activities are good for short term selling and they can demonstrate quick wins. But this short term gratification becomes a vicious circle. Only 4% of B2B marketers measure impact beyond 6 months. Building brand is a long term strategy that pays off in years, not months, so no wonder there is no data to back up the effectiveness of brand. Until now! Benet and Field recommend investing in Brand; their research shows that brand building reduces price sensitivity and increases margins and therefore profit. So the message is stop playing defence and go on the offensive. Make the business case for both brand and demand. Based on the research, follow the 50/50 rule in B2B, 80/20 for financial services, 60/40 for other B2C.
5. Marketing should own the market share mandate: There is a lot of chatter about CMOs being replaced with Chief Growth Officers. The interesting opportunity for CMOs is that they have the best lever for growth in THEIR arsenal, which is brand building. CMOs shouldn’t be on the defensive about owning advertising and brand. This could be the key for the company’s growth. How do you measure marketing’s impact on growth? The study postulates that Share of Voice is the right metric for B2B Marketers who want to lead the growth agenda of their company (read: to transform into chief growth officers). Some hard numbers to benchmark against: 10% extra share of voice causes market share to rise by .7% in B2B and 1.5% in Financial Services, which are both the largest categories for us at LinkedIn, interestingly. Retail and FMCG which spend much more on advertising only see a .2-.3% lift for every 10% extra share of voice.
Research Methodology and Sponsor:
The B2B Institute is a think tank, funded by LinkedIn, partnered with Les Benet and Peter Field, two of the greatest marketing minds of our time, over the last 2 years to produce a report called “The 5 Principles of Growth in B2B Marketing”. It is based on data from almost 1500 marketing and advertising campaigns that has been collected since 2006, so over 20 years, in the IPA database. About 50 of these are pure B2B.
Summarized by Virginia Sharma: Director Marketing Solutions LinkedIn.
Download the full report at b2binstitute.org
***The reason for this distinction is that Linkedin also runs annual surveys of B2B Marketers and puts out separate trends reports of what B2B marketers actually do.