Back in 1983, a trio of professors at Penn State founded the Institute for the Study of Business Markets. Their intent was to establish a formal think tank at a leading university, one that would propel innovative B2B marketing solutions to the forefront of American and global business agendas.
Last July, the ISBM marked 25 fruitful years in pursuit of that very goal. And with a quarter-century's worth of research, practice and progress to show for their efforts, it's no surprise the organization's members have learned a number of important lessons about B2B marketing. Here's a notable sampling:
• Understand, quantify, demonstrate and document customer value. This, the heart of marketing to businesses, continues as a major ISBM issue. When both seller and buyer focus on creating value and sharing its profitable benefits, everyone wins. That should be self-evident, but it isn't when sales organizations still have "stories to tell," sell on the basis of price and fail to listen carefully to what customers say.
• Go beyond what customers say. Business customers often can't (or won't) express what really concerns them or explain the real opportunities they have to add value to their offerings. Finding their hot buttons, and understanding how different purchasing influencers work together on buying teams, are of special importance in business-to-business markets. Some of the techniques enjoying more popularity as business marketers become more sophisticated:
• Studying the customer's business design closely for robust clues.
• Practicing reflexive thinking. You cannot really understand customers, partners and competitors unless you put yourself in their position.
• Visiting customers and examining their processes closely for potential efficiencies their people might have missed—problems that your offering can solve.
• Applying the discipline of Voice of the Customer research.
• Going downstream to the customers of your direct customers value chain—visibility—to learn how your offering adds value that resonates at more than one level of the pipeline.
• Going beyond established research techniques (such as satisfaction studies and conjoint analysis) to probe hidden, intangible factors and deep emotional needs with non-directive tools (such as ZMET).
• Your customers can develop valuable new offerings for you…if you let them. Customer co-development programs and studying how your most innovative and unusual customers actually use your product will spur innovation in market-oriented directions.
• Take a long- as well as a short-term view of markets. Despite constant pressure for short-term results, the truly important marketing initiatives have long-lasting impact. Marketing communications, research, training and other marketing programs create asset values regardless of accounting conventions that expense all marketing costs. Even in times of economic recession, marketing is a necessary investment in the future—even more powerful when competitors fail to invest.
• Implement STP. Following the discipline and logic of "segmenting," "targeting" and "positioning" ensures marketing efficiency and focus. In any market, there's no such thing as the "right" or "best" segmentation. It depends on the firm’s workable options for delivering and promoting customer-specific value drivers.
• Never doubt the power of brands in business markets. A brand name built and nurtured to connote value opens business customer doors and impresses buying decision makers. B2B branding dynamics are complex compared to consumer brands, particularly across value chains as with "ingredient branding." Remember that:
• Attacking a well-entrenched competitive brand head-on is futile.
• Brands belong to customers, not to companies. Brand values live in the mind of the customer and determine how the customer feels about using and "experiencing" the brand.
• "Customer experience engineering," a component of the branding alchemy, speaks to subtle but powerful motivators marketers can associate with their brands.
• Messing around with a successful brand is commercial suicide.
• Keep the right customers, lose the wrong the customers. Firing a customer—particularly a large one, or one with a personal relationship to your company's people—is painful but necessary triage in business marketing wars. Customers who do not receive genuine value in the relationship won't stick around for long, anyway. Customers unwilling to pay a fair premium for the value they receive only steal your profit.
• People go where they're led and do what they're paid to do. Staffers do what they are measured on and compensated for, so successful implementation can occur only if you align metrics and compensation with your goals. It's well known that, as the expression goes, "salespeople are coin-operated." Yet respect, empowerment and recognition for people are essential throughout the organization.
Scrap Obsolete Thinking
Fortunately, old-fashioned and dysfunctional notions keep losing ground as business marketers improve their skills, strategies and sophistication. Bid farewell to obsolete "rules" such as:
• Communications are from "us" to "them"—or they're a dialogue initiated by the supplier firm. Marketing communications actually are becoming more of a "pull" experience as customers take the initiative to search for the information they need. Venerable models such as AIDA (attention > interest > desire > action) and DAGMAR (defining advertising goals for measured advertising results) fail to describe the communication dynamics of a digitally networked world.
• Cost and price have a fundamental relationship. They never did. Price should be based on value. Selling on price usually means giving away value and profit.
• Segmentation is easy. It's not. The obvious ways of categorizing customers—e.g., industry, size and location—usually fail to improve marketing efficiency, and often reduce it.
• The 4 Ps. They worked in the 1950s, but cannot describe the communication and value chain processes at work in today's complex business markets.
• Stick to your technical core competence and outsource everything else. Owning and controlling every aspect of your customer's experience should be among your core competencies.
• Six Sigma has an answer for everything. It doesn't, despite what the zealots insist.
• People understand what "marketing" is, and "brand," and "innovation," and… The assumption that anyone in the discipline shares the same definitions and language that you do is almost always wrong. The truth, as George Bernard Shaw once observed: "The greatest danger in communication is the illusion that it's happened."
• "Creative" equals "cute," and drives behavior change. No. People still really want to know, "What's in it for me?"
"Integrated" means everything looks the same. Integrated really means everything works in tight concert around your brand to drive toward the same objective.
By way of summation, here's one final lesson to underscore all the others, courtesy of ISBM member Kevin Clancy: Despite cleverly worded advice to the contrary, your gut is not smarter than your head.
Ralph Oliva is executive director of the ISBM. Gary Lilien, was one of the ISBM's founders and its current research director.