The difference is digital
Digital technology and the Internet have radically altered the way consumers shop and purchase today, and the strategies and tactics employed by B2C marketers continue to evolve.
It is axiomatic that the mass of information and opinions made available through the Internet, combined with the advent of social media platforms, has increased the number of sources that consumers employ in making decisions, and this has had a disruptive effect on purchasing behaviors. Retail websites, consumer rating services, social media websites, online forums, peer reviews, and blogs are all sources used by consumers to evaluate products and services. Research from several organizations discloses that these behaviors have translated themselves, no less disruptively, to the B2B buyer.
And the walls come tumbling down
This should not be surprising when you consider that the traditional separation between B2B and B2C marketing was largely due to the communication channels available to each. B2C relied on mass media (e.g., television, radio, general interest publications, etc.) to reach the broadest possible audience, while B2B used specialized industry publications, tradeshows and events to target specialized audiences. The evolution of digital media, data capture, and data mining provides both marketing disciplines with the ability to tightly target high-value prospects based on exhibited behaviors, gradually replacing shotgun approaches with rifle-like precision.
On the sales side of the equation, consumers used to rely on visits to retailers when researching large purchases, while business customers had vendors falling all over each other to bring the information to them. With the advent of the Internet as a one-stop information shop, both the B2C and B2B customers have similar tools available to them for research and evaluation, and the purchasing processes have grown more alike in recent years. And this turns the metaphor of the funnel, which has represented B2B marketing for decades, somewhat on its ear.
The funnel model
Classic B2B marketing is built on the idea that vendors (or “solution providers” in marketing newspeak) have to identify potential customer companies that will benefit from what they have to offer. It begins with establishing need awareness within the community of potential buyers. This meant casting a wide net through the industry media, direct marketing, tradeshows, and cold calling in order to draw prospects (aka, “leads”) in at the top of the sales funnel. Once in the funnel, leads would be qualified into a smaller number of actual prospects that would then be engaged by the sales force. These numbers would be further reduced as potential buyers compared the sales pitches of prospective vendors. Finally, after evaluating a short list of candidates and negotiating terms, a customer would select a winning vendor.
This is a basic, simplified version of the funnel. Just Google “sales funnel images” and you’ll surprised at how many different ways an inverted cone can be sliced and diced. In all instances, however, the relevant takeaway is at the top of the funnel, where vendors have traditionally concentrated their marketing in an effort to create awareness for the solution their product or service provides. All with the hope of identifying prospective buyers and getting to participate in the buying cycle process.
Leaner, meaner manufacturing
Today, all industries are challenged to run more efficiently, use less energy, and generate less waste–in addition to responding more quickly to changes in consumer preferences and expectations. The principles of Lean Management and Agile Management are being embraced by an increasing number of businesses. This is necessarily reflected in managing the supply chain, where the need for companies to rapidly address changing market dynamics and provide new or improved products places increasing pressure on vendor relationships. The accelerated pace of technology may also call for the development of previously unconsidered and unavailable solutions, often resulting in strategic partnerships that necessarily step outside the traditional purchasing process.
Intrinsic to both the Lean and Agile disciplines is the need to empower and incentivize employees at all levels to identify waste and inefficiency, and recommend possible solutions. The result is that need awareness is just as likely, if not more likely, to arise from within as it is in response to external vendor marketing efforts. And the Internet provides manufacturers and other businesses with the ability to research and identify possible solutions, from a variety of sources and perspectives, before ever contacting or being contacted by a potential supplier. In this regard, business buyers appear to be transferring their consumer purchasing behaviors and habits to the B2B buying process in general, including the way in which manufacturers purchase products and services.
Bypassing the Funnel
B2B marketers used to engage in outbound marketing efforts to identify leads; now the truly qualified opportunities are more likely to be coming inbound from the customer businesses themselves. This not only bypasses the mouth of the funnel, it means that the customer is well along in its purchasing process and evaluation before the vendor even knows the opportunity exists–and then only if they make it through the initial cut. B2B marketers used to qualify possible leads; now B2B buyers qualify possible vendors.
A basic premise of the funnel model was that business purchases were usually evaluated and budgeted before the search for possible vendors began. Research demonstrates that this is no longer true, and in my next blog I’ll look at what that means for B2B marketers, along with other studies that explore the sources business buyers use to qualify potential vendors.