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"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
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.
Despite the best sales and marketing efforts, inertia keeps most prospects from changing vendors or trying new solutions, even when they display initial interest. Speaking to pain-points is often a more effective strategy than emphasizing aspirational benefits for overcoming the inertia that exists at the end of the B2B purchase decision journey.
B2B marketers naturally focus on the aspirational benefits of their solutions. The big interesting ideas behind their solutions provide much of their brand’s identity. The product management team spends its time enhancing solutions and gives Marketing more paradigm-shifting features to talk about.
These aspirational benefits, especially for new solutions, create excitement, generate buzz in trade publications, foot traffic at trade shows, and initial sales calls. But the level of sales generated often falls short of the expectations built on the positive reactions.
The problem with relying solely on aspirational benefits is that it:
- Assumes that customers are unhappy with where they are at now.
- Underestimates the market’s tolerance for good-enough
- Underestimates the hassle and challenges of switching vendors or changing processes.
- Lacks customer focus – aspirational benefits talks about what the product can do, not what the prospect needs.
Volumes of research into purchase decisions shows that people and organizations typically only invest when they face a pain-point and feel a pressure to act. For decades, sales training organization have made “selling to pain” a pillar of their approach.
Selling to pain is not the same as selling directly to fear, nor is it a negative message. It involves speaking to the areas where prospects are falling short of their goals and objectives and how your solution will help overcome the barriers they face. It focuses on the mundane, nut-and-bolts challenges they face.
Pain surfaces when customers are under pressure to adjust to market changes such as new regulations, loss of market share to competitors, or a general shift in the market’s expectations. It can also come from internal pressures such as slowing growth and top-down directives.
Psychology drives the bias towards pain over aspirational fulfillment in B2B markets. Businesses are made up of decision-makers and decision makers are human. Pains and pressures trigger our loss aversion tendencies and are easier to conceptualize for most people.
- Loss aversion: We feel the loss of something much greater than we do a corresponding gain. Negative feelings about losing $100 are stronger than the positive feelings brought on by winning that same $100. Businesses and B2B decision makers feel pressure when they are afraid of losing something such as market share, profitability, a promotion, or even their job.
- More concrete: Most decision-makers know the problems they face and can conceptualize how a new solution will address their problems: This supplier has a lower price so my overall costs are lower, this CRM system eliminates the duplicate data and work my staff has to deal with, etc. The aspirational benefits (profitability, efficiency, security, etc.) can be ambiguous, especially to a company that feels they are doing an ok job today and that their solutions are good enough.
Corporate vs. Product Marketing
Aspirational benefits still play a critical role in the sales process – they get prospects into the top of the funnel. They garner attention and can position firms as thought leaders. They are core to a vendor’s brand identity. As such, corporate marketing and branding should focus on the big picture aspirational benefits a vendor and its solutions provide.
As prospects move through the decision journey, product marketing, sales collateral, sales processes should begin to emphasize pain-points and pressures, the question of “What is the prospect struggling with today?”.
Identifying the pain
B2B markers have multiple means of identifying the pains and pressures that motivate purchase decisions in their markets.
- Sales team – As part of their process, good sales reps will seek out where prospects have pain. They can provide insights into the broad trends they see across prospects.
- Implementation teams /account managers – Functions that touch customers on a regular basis can provide insights into how customers are using solutions in the real world – what are the using the solution to address.
- Industry news – The key issues business struggle with will surface in what users (not vendors) talk about in trade journals, conferences, user groups, etc.
- Primary research – In-depth interviews and surveys can directly explore pain-points and pressures within customer and prospect markets.
Communicating the big-picture, aspirational benefits of your solution is key to generating interest in B2B markets. However, once you have the prospect’s attention, start speaking to their pain points or they may slip away into the morass of inertia.
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)