Sporadic Customer Journeys in Low Involvement Categories
"Research is a process where you can spend a lot of money and come up with zero. Isurus guides me quickly through the key decisions, helps me avoid the pitfalls, and makes sure I walk away with high-value implications."
-Vice President of Marketing, Enterprise Content Management System Provider
Set it and forget it is the attitude in many low involvement categories – data security, business insurance, telecommunications, etc. Inertia keeps businesses from proactively evaluating alternative solutions or vendors. If the product or service is good-enough businesses don’t have the motivation to evaluate their options.
The purchase journey for these products and services consists of long stretches of inertia, interspersed with periodic spikes in interest in alternatives. During the inertia phase businesses pay little attention to the category: They don’t think about how things could be better or keep tabs on vendors or trends in the category. They remain happy with the status quo.
Product/service failures and significant price increases jolt business out of their comfort zone. They reach out to peers and advisors, conduct online searches, read online reviews, reach out to vendors, take sales calls, etc. Once they make their decision to switch vendors, or maintain the status quo, their inertia returns. They stop paying attention to the category and their awareness of vendors and options rapidly dissipates.
This buying journey cycle is a significant challenge for vendors that operate in these categories. If your product or service is a low-involvement one, convincing prospects that it’s worth their time to look around outside of their sporadic spikes in interest may require more sales and marketing resources than you have available.
It might make more sense to take steps to ensure you can take advantage of the opportunities when they do arise.
Be where they look
Although their need may be urgent, most prospects look into only a handful of vendors: Those they’ve used before, are familiar with, find in a simple online search, know their peers use or are recommended by their trusted advisors. To improve your likelihood of being in this initial consideration set:
- Keep track of, and contact with, individual customers and prospects when they move to new employers
- Attend industry events as a sponsor or attendee
- Identify the trusted advisor channels you can feasibly influence
- Invest in optimizing search results
- Advertise to maintain brand awareness (this varies in importance by market)
Understand the Failures
The purchase trigger in low-involvement categories tends to be a failure, or cost increase, rather than a proactive desire to improve the status quo. Prospects will be interested in the potential benefits of a new solution, but their first priority is to ensure they don’t get burned again.
When you understand the what, where, why, who and how of the typical failures that motivate prospects to switch vendors, your sales and marketing processes and communications can speak directly to these concerns. Convincing a prospect that the failures they experienced will not happen with you will be as compelling as the additional benefits your company provides. If a prospect feels at risk of the same type of failure with a new vendor, they have little motivation to switch.
Recognize the Price Shoppers
Some switching in low-involvement categories is merely price shopping. If you are the low-cost vendor in your category this works to your advantage. If you aren’t, don’t count on these customers for the long-term if you happen to win them. While some may come to understand the value your product/services provide, many will eventually leave for a better price.
Learn from new customers and recent losses
Your new customers are a great place to start to understand the types of failures that prompted them to switch, and how your company made it into their consideration set. Losses can provide similar insights – they may not have selected you, but something motivated them to evaluate options.
We recommend conducting interviews with the customers and losses themselves, rather than relying solely on the opinion of the sales team. Sales reps tend to focus on the benefits of your product/service that resonated with the prospect, not the failures that got them motivated them to evaluate their options in the first place.
B2B Customers Are Not Logos
People don’t want to be a number. B2B customers don’t want to be a logo.
An increasing number of companies refer to existing and potential customers as logos, e.g. Our goal is to add 20 more logos this year. It’s gone so far that a search on LinkedIn will produce individuals with titles like VP of New Logo Acquisition. We think referring to customers this way is a mistake. Beyond being jargon, it sends the wrong message to employees. Customers and prospects are better terms. A customer is a person or organization your company has a relationship with. A logo is a stamp.
This may seem like an exercise in semantics. But Language matters. How you describe customers and prospects in internal documents and conversations sends a message to employees. It subtly turns customers into a score, rather than a relationship.
Many organizations are sensitive to this issue when referring to employees. Employees are partners, associates, leaders, representatives, etc. These labels elevate the relationship the employee has with the organization. Even firms that don’t use aspirational terms for employees don’t call them cogs, underlings or wage-workers.
The use of the term “logos” to refer to customers appears to have originated in the financial services sector where banks and private equity firms display the companies the invest in using PowerPoint presentations. In this situation a logo represents an abstract connection. An investment.
But customers don’t want to be logos. They are organizations full of people with goals and challenges. Customers want to believe that their vendors have their best interests in mind and want to help them succeed. Your employees will be more motivated to help a customer or a person that your organization views as a relationship, then they will to help a logo that is keeping score in a PowerPoint deck. At least we think so.
Are you hard to work with? It matters.
Do your internal processes pull customers and prospects closer to you or do they push them away?
Research shows that companies and individuals that find a vendor easy to work with demonstrate higher levels of loyalty and likelihood to recommend. They use the vendor more fully, e.g. buy more products, use more features. They will even use technically inferior products and services when a vendor makes their lives easier.
This point sounds obvious. But as vendors develop internal processes to improve efficiency and management effectiveness they can accidentally lose sight of how these processes impact customer experience, loyalty and even their brand image. For example: A sales process designed to provide consistency across a diverse sales team may force prospects through a protocol that makes them feel that the sales rep isn’t listening to their needs; or an invoicing protocol that is ideal for a vendor’s internal accounting needs may be confusing or maddening to customers.
So how do you identify the unintended consequences of your processes on the customer experience? You have several options. Start with a common-sense review of your processes. A more systematic approach is to create a customer journey map for each process. And, if you want to be cutting edge, apply neuroscience to see what’s going on in your customer’s brain.
1 Common-sense, Self-examination
An easy first step is to engage in a bit of common-sense, self-examination of any given process (sales protocol, ordering, internal hand-offs, etc.). First outline the process’ broad steps and parameters; and then ask yourself two questions:
- Who receives the primary benefit from how the process is structured and executed?
- If you personally had to go through the same process with one of your vendors how would you feel?
If the benefits of the process primarily accrue to your organization or if you would personally find annoying or troublesome, chances are it has a negative impact on prospect/customer experience and perceptions.
This basic evaluation can highlight easy fixes. It can also help your department/organization start to think in terms of customer experience, rather than internal operations. A critical aspect of this is to consider is the emotional component a customer’s experience. Negative emotions like frustration, mistrust, or anger stick with a customer much longer than the specific details of the experience. These emotions become embedded in the brand’s perception, and are difficult to dislodge.
A simple way to formalize the investigation is to add a question to your customer experience surveys: How easy was it for you to… (place an order, get an answer to your question, etc.)? Alternatively, combing through the open-ended responses in your NPS survey may identify trouble spots.
2 Customer Journey Mapping
Customer journey mapping systematically captures the broad steps customers go through in their overall relationship with your firm. The technique can also drill down on the steps associated with a specific process (e.g. sales interactions, customer support). Simply defining each of the steps a customer/prospect must go through can identify trouble spots that hide in plain sight. Perhaps there is a lack of official transition from being a new customer to an established customer. Perhaps in-person training is only available in major metro areas. Etc.
Defining the steps in a process may identify intuitive problems such as those above. However, it will not necessarily identify all of the areas customers find confusing or hard to deal with – something that seems obvious and simple to you may feel complicated and opaque to customers. Primary research with customers and prospects can bring the market’s perspective into your customer journey maps and ensure they reflect how the market feels, not what you think.
Advances in neuroscience now enable you to literally see what is going on in your customer’s brain. Tasks and activities that are hard to navigate put a greater cognitive load on the customer’s brain. Neuroscience applications measure cognitive load in real-time to identify the specific points in a process where individuals struggle most. As promising as this technology is, the field is new; the viable applications of the approach are limited; and, the tools available are mixed. Buyer Brain’s Effort Assessment Score© is a good one to investigate to get a better understanding of how neuroscience is being used today.
Regardless of how sophisticated your approach, it’s worth putting some efforts toward evaluating how easy it is for your customers to do business with you. All of their experiences with you—not just your product/service—influence their perceptions of your brand, their loyalty and likelihood to recommend you to others.
Many B2B purchases are delayed or abandoned due to the uncertain outcome of the decision. Prospects compare the certainty of the status quo (good or bad) to the potential (but uncertain) benefits of a new solution and opt for the “devil they know”. The implication: B2B Marketing and Sales can help prospects reach a purchase decision by reducing uncertainty for the new solution, and increasing uncertainty of the status quo.
A recent study by Jeffrey Pfeffer, a professor at the Stanford Graduate School of Business shows that individuals favor certainty of outcome over potential benefits – they choose a certain loss of $100 over a chance to flip a coin with the chance to pay $0 or $200. Complexity exacerbates the problem. With more moving parts in the equation, people find it increasingly difficult to envision how the future will play out.
It turns out it’s not Go with the devil you know. It’s Go with the devil you know over anything else – unless you are absolutely sure about the other option.
Companies and B2B markets tend to follow the same pattern: The more conservative the company or market, the more dramatic the effect. The preference for the known plays itself out daily across markets and organizations.
- As prospects go through their evaluation process they ask for more information, details, case studies, etc. in an effort to bring certainty in their decision. In a recent post Make it easy for prospects to buy we explored how providing all the information prospects request doesn’t help get prospects over the hump and to the buy decision – it bogs them down further.
- Flip through a B2B trade publication and you’ll see that many of the ads look the same and don’t change much over time. Behind the scenes, B2B marketers ask their creative agencies to help their brand stand out in the marketplace. However, most B2B brands stick with the original creative strategy because its performance is more certain.
- Research reports that present the data as %’s often get more attention than qualitative insights because a number feels more certain than a description – whether it is or not.
- It took almost a decade for most markets to become comfortable with cloud software solutions. They knew the cloud offered significant benefits over their on-premise solutions, but most companies didn’t want to move until they saw that the cloud was here to stay and that everyone else was doing it too.
Pain points trump benefits
Perhaps the most basic, yet important, manifestation of this trend is that solving pain-points represents a more effective sales and marketing strategy than selling benefits. Here’s why…
- Pains are certain. Concrete. They are something specific the prospect knows it needs to address. Once a pain gets significant enough the desire to find a solution outweighs the uncertainties that come with new approaches and vendors.
- Benefits are hypothetical. If a prospect does x, y, and z, they should receive the benefits. Benefits raise questions: What if a key assumption turns out to be false. Benefits come with more professional risks. Unrealized benefits lack the certainty of the status quo.
The insights from Pfeffer’s research and the day-to-day experience of B2B sales and marketers leads to one conclusion: B2B sales reps and marketers need to change the uncertainty equation.
- Increase the certainty of new solutions
- Decrease the certainty of the status quo
Increase the certainty of new solutions
Recognize and acknowledge the uncertainty
Left to their own devices individuals and businesses can easily overestimate the things that can go wrong with a new approach or soluiton. By acknowledging the risks that exist, vendors can set the parameters of what the risks and uncertainties actually are. This can include letting prospects know where other individuals/companies run into trouble, what needs to be in place for the solution to be a success, etc. Acknowledging uncertainty not only frames the issue, it increases the knowns associated with the new solution.
Create specific certainties
Reducing the number of unknowns (even minor ones) makes options look more appealing. This phenomenon is known as zero risk bias which is the tendency to prefer options that completely eliminates some risk factors in a decision but leaves other untouched, over options that may produce a greater overall reduction in risk, but do not eliminate any individual risk factor. The preference for options that completely eliminate some risks likely stems from the reduction in complexity – it reduces the factors that have to be considered in the decision.
Examples of certainties that B2B vendors can create include:
- Concrete implementation processes and milestones
- Metrics of how other customers use the solution, e.g. 75% of customers select this approach
- Definitive outcomes, e.g. the ads will stand out from competitors (which is different than saying they will be effective)
- Customer satisfaction scores
- Guarantees / Shared risk models
Raise the uncertainty of the status quo
While the status quo feels stable to individuals and organizations, it’s not. Sales and B2B marketers can point out this false sense of security by asking questions or providing data that highlight the actual uncertainty associated with prospects sticking with the status quo: Your market appears to be changing in this way, how will that effect you? These new entrants have entered the marketplace, what does it mean for your market? etc. etc.
There is no single approach or silver bullet for changing the certainty equation. Prospect perceptions of, and preference for security are rooted deep. We suggest a few starting points:
- Examine the customer journey to ensure you understand their status quo and pain points.
- Identify the benefits of your solution that are most believable to the market, and therefore have greater certainty.
- Analyze the Marketing and Sales Process. To what extent does your approach (advertising, collateral, sales process, etc.) reduce or increase certainty for the buyer?
These steps will help sales reps and B2B marketers look more certain in an uncertain world.
Do some prospects slip away at the last stages of their buying journey, even though it seems your sales and marketing teams have done everything right? You may inadvertently be making it difficult for some prospects to make a decision. The following illustrates how this situation arises, and how to avoid it (names have been masked to protect the guilty).
Yellow Manufacturing seemed ready to buy Acme Tech’s CRM solution. It had conducted research about the solutions available prior to reaching out to vendors set a preliminary budget, etc. prior to reaching out to vendors. Acme provided extensive information about its CRM suite, outlined the different options available, demonstrated everything the solution could do and answered every question Yellow raised. But after months of back-and-forth Yellow put the initiative on hold.
What happened? Acme made it difficult for Yellow to make a final decision by providing too much information. In short, Yellow wasn’t ready to process the amount of information Acme provided and ended up with analysis-paralysis.
The tendency to overestimate readiness to buy stems from a misinterpretation of the new buyer journey. Many articles from the past few years talk about how prospects are 70% (or some comparably high %) or more through their buying journey before they reach out to vendors. These data suggest that when the prospect calls a vendor, they have objectively worked through their needs, know what they want and are at the stage of collecting the specific information necessary for vendor selection.
In reality, for many prospects the first 70% of the purchase journey focuses on the rudimentary elements of the buying decision. Yellow identified the problem that needed to be solved, the type of solution that might be able to help them, and some vendors that provide that type of solution. Their knowledge was still broad and thin when they reached out to Acme and competitors. Yellow may have been through 70% of their journey, but as with many situations in business and in life, it’s the last mile where the real learning, thinking and challenges take place.
When Yellow reached out to Acme CRM, it still needed to determine whether to invest in a solution at all. By providing stacks of information about its products, Acme increased the dimensions Yellow needed to consider, raised questions Yellow hadn’t thought of before, and made the solution and decision feel too big. Collectively this slowed down the decision process and eventually knocked Yellow out of the sales funnel.
This confusion about Yellow’s readiness to purchase isn’t entirely Acme’s fault. Prospects like Yellow can contribute to the impression that they are an informed buyer. Consciously or note, Yellow worried about being taken advantage of by Acme’s sales team and process, and presented themselves as knowing more than they did. Yellow knew the buzzwords, and had specific questions—they talked a good game. In addition, when faced with complex questions, people often substitute a smaller, easier to understand questions in place of the hard ones. Many B2B technology solutions raise big picture considerations about business processes, integration, how ROI will be measured, etc. The list of specific questions Yellow asked Acme CRM reflected a need to get their head around the solution, rather than an indication that they just needed a few more details to finalize their selection of vendor.
Improving the last mile.
Vendors can implement two related strategies to improve their effectiveness and win-rates during the last phases of the prospect buying process.
- Map the last 30% of the buying journey in more detail
- Use a prescriptive sales approach
Mapping the last 30% of the buying journey
When B2B marketers map the buying journey, many tend to focus on the steps in building awareness and consideration, which happens to be where marketing has the most responsibility. However, by paying as much attention to mapping what happens after a prospect engages with the sales team can enable their company to close more deals. Some of the key aspects to explore include:
- How knowledgeable and informed is the typical prospect when they begin to interact with the sales team. This helps marketers and the sales team set a baseline for creating materials and processes that speak to prospects in a way, and at a level, they can understand.
- Identify the 2-3 core drivers of the buyers purchase motivation—even when buying the most complex product, most prospects are focused on improving a handful of key activities. This will provide a framework for marketers and sales team to speak to the benefits that prospects care most about – instead of a range of things that are interesting but unlikely to influence their purchase decision.
- Determine the internal barriers your internal champion is likely to encounter and provide data and recommendations for how they can overcome them. Once your champion is sold, the deal can still be derailed if they cannot sell it internally.
Use a prescriptive selling approach
When prospects reach out to vendors most are still trying to understand what solutions would be the best fit for them and whether to should invest at all. Many ask for different options because they don’t really know what they need and hope that one of the options presented will stand out as the right choice for them. Instead too many options can confuse the issue. Research conducted by CEB shows that vendors that take a prescriptive approach—provide a recommendation with a clear rationale instead a series of options—close significantly more deals.
That said, it is important for your recommendation to be in line with the core drivers of the prospects purchase motivation. Prospects tend to reject solutions they view as too broad in scope relative to what started them down their purchase journey. Put another way, presenting your entire suite of products can knock you out of the running if the prospect is focused on a single module.
Making it easy for prospects to buy
The vendor that makes it easy for Yellow to make a decision by presenting information they can understand, addressing Yellow’s core needs, and presenting a recommendation instead of options, is most likely to win Yellow’s business.
The Art of War advises that we can outsmart opponents and avoid battle when we “know thy enemy”. While marketers typically define direct competitors as the enemy, internal barriers within prospect organizations pose equal peril.
Isurus has seen many innovative ideas in 20 years of B2B market research for technology companies. Some ideas meet great success out of the gate, others languish for years before taking off, and some recede and disappear altogether. Through this experience, we’ve identified four major reasons that prevent prospects from adopting new technologies.
Satisficing: Inertia poses a strong barrier for products that improve on an existing process or system. Decision makers start with a mindset of “if it’s not broken, don’t fix it”. This is especially true with complex systems, where change leads to significant disruption. Unless the status quo is broken and painful, the new product needs to show large improvements in cost savings, productivity, competitive advantage, and the like, to overcome the inertia. Satisficing also occurs when decision-makers or end users lack a point of comparison for their existing system: The current system seems okay until they step back and compare it to what’s possible.
Competing priorities: Purchase decisions are made in the broader context of organizational priorities. A new product competes with all the other technology projects, even if they address a completely different need. For example, a new supply chain management application competes with a virtual network automation project. A new investment must prove why it is better than the status quo, and why it deserves resources that could be allocated to something else.
Pain of transition: Gone (mostly) are the old days of giant ERP implementations that were years and millions over-budget, and earned the permanent scorn of end-users. Still, some level of process change and learning is inherent in a new system implementation. The benefits of the new system may depend entirely on successful adoption by end users. For example, if Sales doesn’t enter information into the new SFA system, it can’t deliver the intended benefits. The decision to buy a new system will take all this into account: What is the level of change required for the customer to realize the benefits of the new solution? How realistic is it that the customer organization can achieve that change, and what will be required to do so? When is the right time to embark on that journey? The benefits of the new solution have to outweigh the pain of transition, or minimize the pain altogether.
Ecosystem dependencies: Some new products depend on other processes, technologies and systems to succeed. These dependencies occur at a macro level and within individual organizations. Subscription pricing for software is a good example of macro level dependencies. Fifteen years ago, software providers experimented with the ASP model that enabled customers to license major business applications on a yearly basis instead of making a large up-front investment. The subscription model failed to gain traction until virtualization and cloud technologies evolved to make software-as-a-service reliable and cost-effective. At a micro level, an individual prospect needs to have the ecosystem in place to support a new product. For example, a mobile device management solution will resonate much more with companies that allow Bring Your Own Device (BYOD).
It’s worth stepping back to consider how these four patterns apply for your product or market. Start by determining which barriers are relevant and most important in your market. While they are all present to a degree, typically one or two will rise to the top and pose a bigger challenge to your success. Source the data from internal expertise and experience, insights from Sales, or formal market research.
Then decide where the challenge is most effectively solved: Is it a product problem? For example, is it just too complicated for users to adopt? Is it a Marketing problem–are we targeting the right prospects with the right message? Is it a Sales problem–does Sales need to engage stakeholders to address change management concerns?
Approaches to mitigate each barrier include:
- If satisficing is a top barrier, Marketing and Sales need to highlight hidden pain points that the market doesn’t yet recognize. This can include identifying new stakeholders who are most likely to be unsatisfied, or to have the most to gain from disrupting the status quo.
- The pain of transition may require that the implementation process be a focal point in the sales process, to show a clear and successful methodology for achieving the goals for the new system.
- To compete against other priorities, Sales needs to understand IT’s broader plans and goals. This knowledge equips Sales to make the case for your solution. It may also provide a reality-check on the likelihood of a sale, and timing of the decision.
- Mapping ecosystem dependencies at a macro level informs the market opportunity analysis and business case for a new product. If critical elements of the ecosystem are missing, adoption will be slower, take longer, and require more evangelizing. At a more micro level, knowledge of the ecosystem dependencies can be implemented to improve lead generation and qualification.
Successful adoption of innovative products (at an individual customer or for the market as a whole) depends on many factors. Incorporate this analysis into your strategy to effectively allocate resources against the barriers present in your market.
Speaking to Trust in B2B messaging
Communicating trust in B2B sales and marketing messages requires showing, not telling. Here’s one way to do it.
In many B2B sectors, Trust, or Trustworthiness, sits near the top of market’s vendor evaluation matrix. Given that trust is earned over time presents a barrier to prospects switching to vendors that they don’t have experience with. When vendors say Trust me, at best the market views it as marketing-speak, at worst it conjures up images of unsavory car salesmen.
At a high level trust equates to delivering what’s promised. This promise consists of a mix of discrete rational and emotional elements (e.g., ability to understand the customer’s need, expertise to provide the right solution, on-time delivery, confidentiality, financial stability, makes me feel valued, has my best interests in mind, etc.). The emotional dimensions need to be experienced to be credible. However, using the rational elements in value propositions and messages begins to build trust in the marketplace – it shows that the vendor understands what is important to customers and prospects.
Finding the right elements to emphasize becomes the challenge. Primary research offers different approaches that help marketers understand how to build trust with prospects. Quantitative research uses statistical analysis to measure the impact of specific attributes in cultivating trust. Qualitative research explores the personal dimensions of trust in B2B relationships. The following provides a high-level overview of how primary research can help identify the core drivers of trust.
Statistical approaches such as regression analysis can measure the strength of the relationship between trust and specific service/product attributes, e.g. to what degree does billing clarity drive trust and how does its influence compare to other factors such as on-time delivery, or security.
The first step in regression analysis is to generate a list of attributes that likely contribute to trust; the more specific the attributes are, the better. Most B2B marketers start their lists with the intuitive ones such on-time delivery, product quality, no hidden fees, etc. But it is important to include factors along the customer journey that may seem small, but can have a big impact on trust such as accurate billing, things work the way they were described in the sales process, consistent account reps, does not go over my head to win business, etc. Some B2B marketers can generate diverse and comprehensive lists based on the team’s collective knowledge about the market, others find conducting a small set of customer interviews helpful.
The next step is to conduct a survey with customers/prospects to measure how the company performs across the discrete elements related to trust and overall trustworthiness. A regression analysis of the data will identify the strength of the correlations. A key benefit of regression is that it derives predictors of trust by exploring how customers view their vendors and relationships, rather than through importance ratings (what customers say is important and what drives their perceptions in the real world may be different). Once the core drivers of trust are identified they can be leveraged in sales and marketing communications.
Even if a B2B marketing team does not have the budget to conduct survey research with customers and prospects, going through the process of systematically identifying the possible drivers of trust can help the organization. It provides a framework for the team to conduct an internal assessment of how the organization performs across these dimensions and identify any critical gaps that should be addressed.
Qualitative research approaches such as open-ended, in-depth interviews (IDIs) with customers and prospects can provide fodder for the personal narratives around trust. IDIs are a good methodology to understand how individuals develop opinions and to explore the emotional side of business decisions. In IDIs, individuals are asked to talk about experiences such as: When a vendor exceeded their expectations, let them down, provided peace-of-mind in a crisis, how these things affected them personally, etc. Their responses provide insights into the characteristics of vendors that customers deem trustworthy and their emotional connection to those traits. B2B marketers can use these themes, tonality, and vocabulary to develop value propositions and messages that resonate with the market and speak to them in their own words.
You can trust us because…
At the end of the day real trust is earned through repeated successful customer interactions. However, B2B vendors can credibly position themselves as trustworthy, by demonstrating that they understand what it takes to earn a potential customer’s trust.
The mid-market is an unfulfilled market opportunity for many vendors that serve enterprise segments. Rethinking the needs of the mid-market can improve a vendor’s chances of succeeding with smaller customers.
The mid-market challenge
As enterprise markets mature, vendors look to the mid-market as a growth opportunity that looks primed for entry. Many enterprise vendors enjoy strong brand awareness and the mid-market views enterprise products/services as the “Cadillac” that’s out of reach. The mid-market knows that enterprise-class products provide more capabilities than what they use today and agrees that these extra capabilities provide value.
Given these market conditions, Sales finds it easy to get sales calls and schedule demos. The mid-market likes the attention from premium providers. However, these interactions often don’t lead to as many sales as expected.
Many enterprise vendors frame the problem as a Sales and Marketing challenge, where the mid-market just doesn’t understand the value of the solution, but with the right message or sales process, they could be made to see the light. This is misleading – a range of factors prevent the mid-market from upgrading to enterprise class solutions, even if they would like to do so.
Lessons from BMW
Although BMW is a consumer brand, its experience moving from the luxury market to the mass market offers relevant lessons for enterprise vendors seeking to grow in the mid-market.
BMW possesses considerable brand equity: Most consumers are aware of it, view it as a premium product, and acknowledge that it produces a higher quality vehicle than say, Chevy and Ford. Unfortunately for BMW, despite this brand equity, the market for luxury cars is finite. BMW’s mid-market opportunity for growth is the average consumer. BMW recognizes that it cannot gain sales with average consumers by emphasizing its quality or advantages in its sales and marketing. Consumers don’t need to be convinced of its quality or how it is better than what they drive today – they already know.
Marketing campaigns can attract a small sub-segment of average consumers willing to stretch their budgets to enter the luxury segment. However, this low hanging fruit doesn’t represent an opportunity for sustained growth.
BMW recognizes that price is the limiting factor and has implemented multiple strategies to make its vehicles more appealing and feasible for its mid-market with varying levels of success. These include:
- Offering competitive financing
- Leasing vehicles at a monthly rate average consumers can afford
- Cultivating a used BMW market
- Introducing lower-priced models for entry level buyers
BMW’s mass market challenges seem obvious, and they are. What’s less obvious is that these same dynamics unfold in the B2B mid-market when it evaluates enterprise-scaled solutions. The mid-market’s barriers include:
- Budget limitations: The mid-market faces greater near-term financial constraints than enterprise markets and while they understand ROI arguments, in the short term they simply do not have the budget available.
- Resources to execute: Even if they have the budget many mid-market organizations lack the people or processes needed to take advantage of the features/functionality of robust solutions designed for the enterprise. This reduces ROI arguments.
- Limited needs: Many mid-market organizations do not have enough volume of data, transactions, production, throughput, etc. to require a robust solution, again reducing the ROI argument.
Strategies for the mid-market
One approach to addressing these barriers follows BMW’s lead and asks: How can we make the product/service affordable/feasible for the mid-market? Strategies to consider include:
- Lowering prices: Can prices be lowered enough to attract mid-market customers? This is the simplest strategy, but also the least appealing – modest price cuts typically do not attract meaningful number of the mid-market and leaves money on the table from enterprises that would have continued to pay the higher price.
- Pricing structure: Can the upfront cost be reduced by tying it to usage, number of users, or some other factor that scales along with the size of the customer. The growth of cloud applications in enterprise technology is due in large part to the short-term cost structure that enables organizations to rent software they would not be able to buy outright.
- Develop smaller solutions: Can the product/service be scaled down to align with the functionality the mid-market uses and the budgets they have available? This could be offering scaled down version or developing a new brand altogether.
- Help customers use the solution: Can programs, trainings, etc. be developed that would help customers grow into the solution? Some mid-market organizations need help envisioning how they could use a robust solution, and the steps they would take to make it work, etc.
These strategies do not come without risk. Lowering pricing and offering scaled down options may increase interest within the mid-market, but may also cannibalize enterprise customers willing to accept less if they can lower their costs.
Determining which of these strategies makes the most sense for any given market requires insights into four broad areas:
- The core features/functionality used by the mid-market today
- Their resources and processes
- Barriers to change
- What they pay today
These insights can be collected in a number of ways including.
- Competitor analysis: Vendors that specialize in the mid-market have identified its core needs and general price tolerance.
- Sales reps: Sales reps have direct contact with prospects and can also provide feedback into the aspects of the solution that generate the most interest, why deal stumble, etc.
- Primary research: Primary research can provide direct feedback from the market in terms of its needs, solutions it uses, willingness to invest in new solutions, etc.
In the end the most important thing to remember when entering the mid-market is that it is different than the enterprise market. The businesses aren’t just smaller, they face a different set of needs and limitations. Understanding those differences can greatly improve your chances of success.
Your NPS or customer satisfaction survey can increase the frequency and number of purchases a customer makes over time.
Research by Sterling Bone of Utah State’s Huntsman School of Business indicates that starting customer feedback surveys focused on what you do well increases NPS and satisfaction scores in the short-term, and can increase the frequency and number of purchases a customer makes with you over the long run.
The boost in NPS or satisfaction is expected – asking people questions like “What was the best part of your experience?” puts them in a more positive frame of mind than does asking them to remember how you’ve fallen short. And enough existing research shows that people in a more positive mood give higher ratings on surveys.
That this positive nudge influences purchase behavior months after the survey comes as a surprise. We usually think about how experiences drive the ratings on surveys, not how surveys may influence behaviors. The researchers have two hypotheses for this effect: Asking “what went well?” generates a positive feedback loop by surfacing good memories for the customer; and, that people unconsciously try to avoid cognitive dissonance – if we said something positive about a product, we don’t want to seem inconsistent by not continuing to purchase it.
The findings raises the question: Should you adjust your voice-of-the-customer or NPS program to take advantage of this phenomenon? National brands such as Subway and Jet Blue already incorporate these ideas into their customer feedback programs. There are four broad justifications for making the change.
- Traditional research philosophies reject this type of manipulation and strive to minimize any impact the artifice of a survey has on the results. We don’t want to bias the data. The reality is that most research is biased (more on that later). If asking about positive experiences primes some customers to be happier with a product or service, then the opposite is probably also true. A survey that asks customers to focus on problems may prime them to be less happy then they actually are. More research is required to answer that conclusively, but it would be surprising if the phenomenon only works in one direction.
- There is bias in every data set – the mistake is not recognizing its nature. If you know what it is you can use judgement to account for it as you make inferences, and strategy based on that data. If your VOC program shifts from a problem-finding focus to a positives-focus, expect an increase in NPS and satisfaction at first due to the positive bias. Scores will stabilize as the new protocol is repeated over time. The easy mistake to make would be to forget that the one-time increase in the metrics is due primarily to a change in the survey instrument. But if you account for the one-time jump in ratings and reset your baselines, having a positive bias to your surveys isn’t a problem in and of itself.
- Some strategists believe that it is more effective for companies to focus resources on enhancing what they do well instead of on potential areas improvement. The underlying idea is that whatever a company does well is likely its biggest competitive differentiator and maintaining those strengths should be a priority. Proponents of this approach also point out that identifying and fixing problems does little to attract new customers. If your company embraces this philosophy, focusing your voice-of-the-customer programs on the positive will provides the data you need to strengthen what you already do well.
- For most companies, voice-of-the-customer programs are a cost center – as much as they help companies in the long-term, it is difficult to tie the insights gained to a direct financial benefit. This explains why many VOC programs and other customer surveys are scaled back when budgets get tight. If Dr. Bone’s research stands up to further validation, using positive questions to influence purchase behavior may help justify the cost of voice-of-the-customer programs. Using A/B testing of the survey types and their correlation to long term customer purchasing data would provide you with the insights to show the financial impact of your program.
So what is Isurus’ point of view? To start with, we agree with the broader implication that customer surveys are touch points that influence customer opinions. Customer surveys can…
- Show that you care about customer opinions
- Feel relevant to customers, or conversely make it seem you don’t understand their needs
- Be either a pleasant or a tedious experience for customers
- Show your hand about future intentions
- Feel like a burden to customers if they get too many
- Lose credibility if customers never see any changes based on their feedback
As with any customer touch point, you should manage it to ensure a positive customer experience. Customers should believe the survey was worth the effort they put forth, and that you respect their time and opinions.
The decision to use a positive orientation in your VOC program depends on your competitive situation. If all is going well in terms of growth, profitability, etc. a positive orientation towards your VOC program will likely provide some benefit. However, if growth has slowed, customers are leaving, a competitor is making inroads into your market, etc., you need to know what has gone wrong. Your historic strengths may not be as differentiating as they once were and emphasizing them may contribute to your decline.
For more information on the research visit: “Mere Measurement ‘Plus’: How Solicitation of Open-Ended Positive Feedback Influences Customer Purchase Behavior,” by Sterling A. Bone et al. (Journal of Marketing Research, 2016)
Re-Thinking the C-Suite Sales Strategy
Selling to the C-suite or other senior executives is the holy grail of many B2B vendor’s sales and marketing strategies. Vendors believe a senior executive is in the best position to recognize the business value of their solution. We believe selling to the c-suite is not the right strategy for many vendors, based on recent research on decision-making, our conversations with executives and some practical realities. If you plan on moving your sales & marketing upstream, consider how the following trends impact your sales & marketing decisions and strategies.
When we interview executives about their buying processes, they almost always emphasize the important role their team plays in identifying and selecting the products and services the organization uses. Executives see their role as managing the business at a strategic level – they set the direction and rely on their team to execute on those plans through a mix of internal and external resources. Most executives acknowledge that they lack the hands-on knowledge to formally evaluate how a product or service will improve existing processes or help accomplish their vision. Executive managers rely on their teams to identify and vet new ideas and vendors before they become involved in the decision process. As a result, support from a team member provides a far more credible voice than any vendor can have by trying to by-pass the team and going straight to executive management.
Although exceptions exist, in most organizations the senior executives build a team of reports that they trust and communicate with regularly. Although the two groups may have different focuses (strategic vs. operational) in most organizations they generally share an understanding of organizational needs, priorities and opportunities. Only in dysfunctional organizations are their opinions and perceptions radically different. Some vendors worry that middle management doesn’t really understand their own business or how the vendor’s product or service could help them. A way to put this in perspective (assuming you are product marketing manager, product director, director of marketing, director of operations, etc.) is to ask yourself if you have a radically different understanding of your businesses’ goals, challenges, and priorities than your boss and are blind to new opportunities? The answer is probably “no”.
Even when vendors manage to get face time with senior executives, the decision process isn’t a top-down decree. Recent studies indicate that 4-5 people are involved in a typical B2B decision, up from the 2-3 a decade ago. The numbers go higher as the size and significance of the purchase increases. The buying process has also become more collaborative and consensus driven. We expect this style of decision-making to be more prevalent as the management philosophies of Silicon Valley continue to influence businesses in a variety of sectors. As a result, top-down decisions will continue to shrink in most organizations. There are, of course, cases when the C-suite brings in operational products and services without the involvement of their team. But in most of these the executive is proactively looking for something specific, not responding to unsolicited vendor pitches.
And at the most basic level, senior executives are busy people focused on the big picture. Therefore, relatively few discrete products and services are worth their attention. They set the direction for organization, and rarely dictate the solutions to use to accomplish operational tasks. Most products and services help organizations accomplish tasks and processes they’ve already identified as important – few change the strategic direction of the organization. Beyond that, many solutions fall into the category of minutia for executives at large organizations – a product that makes or saves $1 million may not be significant enough to warrant the attention of executives.
None of these factors would matter if vendors had unlimited time and resources. However, most need to devote a limited number of sales people and marketing dollars to areas where they will provide the most return. So how can you tell if it is worth targeting the executive suite? Start by asking a few broad questions (and answering them honestly):
- Related to your product/service who is likely to know the details of what systems and process are in place and where they are falling short?
- Who will have the most accurate understanding of how your product/service is an improvement over what they are doing today?
- How large are the improvements/benefits your product/service brings relative to the organization’s other initiatives and priorities?
- Based on your pitch, who is the most likely to take your sales call, visit your booth at the trade show, or notice your ad?
In addition to answering these questions it can be useful to map the customer journey from an organizational standpoint, rather than an individual’s perspective: How do prospect organizations become aware of products/services/vendors? Who goes through the discovery process?
It might be that after a systematic review you find it makes sense for your organization to spend the time and effort trying to reach the C-suite. But it could also be that someone in middle management not only gets you in the door, but also is your most effective champion.