Anyone who has been in the business-to-business marketing space for any length of time knows first-hand that it comes with its own particular set of challenges. Unlike marketing to consumers, B2B businesses have to overcome the challenges of longer sales cycles, smaller audience markets, and higher purchase prices. And just as frequently, they have the extra step of generating leads to be turned into a sale, as opposed to selling a product directly. That can make measuring ROI seem nearly impossible.
This makes B2B marketing challenging, to say the least. While I can't cover every challenge you may encounter in your B2B marketing efforts, I have outlined four common challenges that you may be facing and how to overcome them to grow your business.
Challenge #1: Embracing digital marketing
If you're reading this article, then perhaps you have already embraced digital marketing as part of your business growth efforts. Or maybe you're still trying to understand if digital marketing is right for you. Perhaps business is good and you have plenty of work keeping you busy so you're questioning why you need to go all-in on digital marketing.
Truth be told, if you're still relying on old-school marketing strategies, those are quickly going the way of the Yellow Pages - assuming you even know what the yellow pages were. If you're not sure what I mean by that, let me clear it up: Marketing strategies that don't incorporate digital are becoming obsolete. In the B2B space, 50-90% of buying decisions are made prior to making contact with a salesperson. A significant majority (71%) prefer to perform online research, with or without the help of a salesperson.
Again, just in case that's not clear: Most buyers will do their research and decision-making digitally.
This brings us to two primary questions every B2B business must ask itself:
- Will I invest in becoming a destination hub for researchers, or forgo that opportunity so my would-be customers land on my competitors' websites instead?
- Are my competitors doing a better job of educating and earning buyers' trust, or will I put my company at the forefront of creating value that earns sales?
It's a long road from research to sale but that path can be cut down significantly by investing in the right kinds of digital marketing. Becoming an online authority in your niche opens up new opportunities for branding and proving value to your audience long before they are even ready to start talking about the sale. It also has the side benefit of keeping your company looking to the future.
Challenge #2: Producing content
In the digital age, every company must operate as a publishing company. I often make this point when speaking to other businesses about digital marketing, and illustrate it using the image below.
Up until fairly recently, none of the companies shown above were known as content producers. Netflix and AMC's business models were to get paid for broadcasting shows and movies produced by other studios. While that's still part of their business plan, it is quickly taking a back seat to producing their own content.
No one really thinks of Red Bull or Chipotle as content producers, but they have both been active in creating and publishing entertainment content. Among other things, Red Bull currently has a magazine and a record label and employs 135 people strictly dedicated to their content efforts. Chipotle created a 4-episode TV series that didn't mention their name once.
I'm not suggesting that every industrial manufacturer jumps into the entertainment space. I am suggesting, however, that if your company is a market leader, it has an enormous amount of expertise and industry knowledge. Opening the door to that content will demonstrate thought leadership and bring more customers.
As you probably already know, content is hard! The good news is, the brands mentioned above are not your competition. The bad news is, any competitor that starts building content first is giving themselves an advantage that you don't have if you're not producing content. The trick--if there is one--is planning. Sit down with your team and map out content ideas for the next four to twelve months. Then determine the best format for each piece of content (text, image, video, social media, etc.) Planning is half of the content creation battle. Once you have a plan in place, make assignments and stick to deadlines. Just like any other part of your business plan, you must execute. If you constantly find content creation on the back burner - well of course you can reach out to your most trusted digital agency.
Most B2B businesses don't produce content because of the time it takes to do it right. Unfortunately, there are no shortcuts. But if you plan it, schedule it, and put the right people in charge of it, your content production will increase in quantity and value over time, doing more to serve those researchers from Challenge #1 above.
Challenge #3: Understanding conversion values
In e-commerce, the conversion is the sale. But most B2B businesses don't have the luxury of selling products directly and instead must manage leads from a variety of conversion points on their website.
Most B2B websites range from one to a half dozen or more "conversion" points. These can be a contact form; a phone call; a request for a quote; a download of a brochure, a whitepaper download, etc. You get the idea. Each one of these conversions has a different value based on the likelihood of it turning into an actual customer. When looking at your online conversion data, it's important to differentiate between each of these conversion points and their position in the buyer's journey.
If your digital marketing team is touting growth in conversions but your sales are not following suit, it may be because they have lumped all their conversions into the same bucket. While you can't fault them for showing the improvements they have achieved, you need to make sure they are focused on the conversions that have the highest value to your bottom line.
Challenge #4: Managing expectations
Digital marketing itself is a long-term play. While a website can be optimized within a definitive amount of time, it's the building up of your digital authority that takes time. This makes digital marketing a challenge for many who expect to see quick results. I tell most people that they're looking at nine to twelve months before they'll really feel like their digital strategy is starting to gain traction. Agencies that sell "fast results" and "guaranteed rankings" are looking for trouble.
But with the long sales cycle of B2B, it's even more important to manage expectations. Not only do you have to bide your time while you build up your digital authority, you then have the added delay of the time it takes to convert your leads into actual customers. The good news is that with analytics in place, you can start tracking metrics that prove whether or not your digital marketing strategy is working.
As you build your online authority and optimize your website, you should begin to see a rise in the metrics. First, you should see an increase in traffic, which will be followed by an increase in the low-value leads, followed by an increase in the high-value leads. Ultimately, you want more of those high-value leads that you can convert into customers, but it often takes more of the former to get the latter.
When you see traffic increase but don't see an increase in leads, remember that many searchers are doing research first. That means a potential customer may come back to your site one or more times before they reach out. We often see leads that become customers touch our client's digital footprints 7-10 times before reaching out. I understand all business owners want results, but having unrealistic expectations in regard to the already long timeframes that are a part of digital marketing, as well as B2B marketing, will only cause frustration and potentially lead you to bail on a campaign before it has a chance to succeed.
Risk and reward:
We've talked a lot about some of the challenges that digital marketing represents in the B2B space. They are very real. On the other hand, so are the benefits. It's not uncommon for us to have a B2B client that can fund an entire year's digital marketing effort in one sale. E-commerce, ROI is certainly more visible. From a B2B standpoint, it can be far more significant.
Take this ROI scenario for example:
For an industrial equipment manufacturer, let's say an average sale is $75k.
- Average gross margin of 30%.
- Average close rate on qualified leads 30%.
- Average all-in cost per lead of $330.00.
- Digital marketing spend of $10,000 per month.
- Averaging 30 qualified leads per month.
These numbers equate to an annual digital marketing spend of $120,000. Generating approximately 120 sales at an average of $75k each. Those 10 sales generate 9mm in revenue and about 3mm in gross profit. Worth it right?
The numbers I have provided above are not an anomaly. They are very realistic and in line with what we see every day.
The keys to achieving a solid return on investment in the digital marketing space despite the challenges in the B2B space:
- Openly leverage your real numbers revenue, gross margin and closing rates.
- Be consistent in your digital marketing efforts.
- Track results and fund the efforts that generate opportunity.
Overcome and conquer
If you're frustrated with the challenges faced in digital marketing for your B2B business, you're in a very big boat. But nobody conquered anything by doing nothing. Think of digital marketing as unclaimed land. There is a lot of it out there, and sooner or later, someone is going to stake their claim. As the digital landscape grows (and non-digital shrinks) you're going to need some digital real estate to survive.
No matter what avenues you go to for new business, there will be challenges. Are digital marketing challenges any greater than others? Maybe. But if the challenge is greater, so then is the reward. If you're looking for a true partner to help you overcome these challenges and the ones yet to come, get in touch with us.