“I don’t do a lot of marketing anymore”, one B2B CMO recently confessed to me over a coffee. “I focus mostly on strategy now”. He went on to list what we has working on: market development, positioning, product strategy, pricing.
That is marketing, I pointed out. I resisted the urge to stand on the table and jump up and down, shouting it in his face. But I wanted to.
What he meant is he’s not doing a lot of marcomms now. He knows the distinction, of course. But such is the strength of the association of marketing with advertising, comms and lead generation that we have to excuse ourselves in this way.
This isn’t an isolated issue. The role of marketing in B2B has become blurry. This is my experience talking to senior marketers and we’re starting to see it in the research too. A recent report from McKinsey showed that while 90% of CEOs believe marketing’s role is well defined, most CMOs and CEOs have different definitions of the role. It also showed how much marketing is being done by peers in the executive that do not have marketing in their title.
Until now, this hasn’t created a big problem for B2B marketers. For the past 10 years, B2B marketing has been gaining influence and confidence. I’ve worked with CMOs and senior marketing leaders in leading B2B brands through this period and I’ve been a CMO myself. I’ve seen how changes in buyer behaviour, accelerated by the pandemic, have given marketing influence over the customer journey, allowing marketers to step out of the shadow of sales. A long period of low interest rates fuelled investment that has mandated growth first, profitability later.
B2B marketers have ridden that wave. We’ve staked our ground as the brand and demand experts. Invest in advertising, balance it 60% brand, 40% demand or thereabouts, lead with emotion, develop distinctive brand assets, stick on some performance marketing, Bob is your uncle and he’s got a nice pied-a-terre in Cannes.
But now the economic mood has darkened. The era of cheap money is over, the emphasis is on profitability not just growth. The game has changed so marketers must adapt too.
It’s not that the focus on brand advertising is wrong. Marketers should be the champions of long-term. It is marketing more than any other function that can protect and create future revenue streams. Partly that comes through brand building, but only partly. If that’s all we talk about, we risk being the comms function – now is the time to be more than that.
It is marketing more than any other function that can protect and create future revenue streams. Partly that comes through brand building, but only partly. If that’s all we talk about, we risk being the comms function.
I’m seeing smart B2B marketers look at marketing’s role through the lens of value creation. In a lower-growth environment, with less cash to invest, focusing on value creation helps to protect margins and develop future revenue streams. It is crucial for companies to balance this with the urgent need for pipeline. As a concept, value creation can help build a shared understanding of marketing’s role in the new economic reality.
There are some simple, shorter-term contributions here – the obvious being price. The first move made by fractional CMOs I speak to is to put up prices 10%+. But I also see a growing focus on quality, rather than quantity, as a way to build long-term value, in a few different ways.
Putting revenue quality on a par with revenue quantity
In many B2B businesses, some customers are seen as more valuable than others. In revenue terms the difference can be 20x, 30x or more between bigger and smaller. But the value-delta extends beyond revenue.
The smart marketers I know are looking at adjacent segments right now, while others are trying to change the shape of deals, to ‘swim upstream’ and win more strategic work. A customer that acts as a beachhead into a new market, a new revenue model, or as evidence of long-term growth can have a huge impact on enterprise valuation, above and beyond the revenue it generates.
Marketing can be the driving force behind these opportunities for long-term growth and resilience. Becoming custodians of revenue quality gives us a commercial role that encompasses but is broader than the brand team: we need also to look at areas like deal shape, contracting models, market development, product development, customer insight – the other stuff of marketing.
An account-based go-to-market
This unevenness in customer value is why, in the right scenarios, account-based approaches are so effective in B2B, to the bafflement of many who say growth comes through market penetration. Again, context is important here. For some B2B companies, particularly those with smaller deal sizes or a high degree of homogeneity in the types of deals they do, the Ehrenberg-Bass, Binet and Field playbook of growth through reach and market share will be the right strategy. But is also true that in many B2B markets value creation is disproportionately influenced by a relatively small number of known accounts. This is the lived experience for many commercial leaders in B2B, and marketing needs to define its role accordingly.
The leaders in ABM are increasingly using accounts as the organising principle for their whole go-to-market. They can define different journeys and engagement strategies for customers based on the type of relationship they want with the organisation. Orchestrating everything through an account-based model allows a combination of sophisticated mass marketing for the majority, with the ability to cherry-pick clusters of accounts for more intensive ABM plays. It starts by defining your customer segments, how you create value for them and how they create value for you.
Connecting quality of engagement with commercial performance
Once you are able to measure quality of engagement at the account level, you can connect it to commercial impact. At a recent conference, one senior B2B marketer shared that his company can now see that a highly engaged account has a more than 5x win value versus a low-engaged account.
This is a great example of a shift I’m seeing from marketing focusing on quantity (of leads) to quality (of engagement) through the funnel and correlating that with performance at each stage. Every B2B marketer and salesperson knows the MQL is a busted flush. To regain commercial credibility, we need to be able to articulate the relationship between the three Vs of pipeline: volume, value and velocity, not just the first.
In these straightened times, businesses need quality marketing more than ever. For those that have to fight smart with restricted budgets, we need to look beyond comms and advertising and reclaim the full breadth of our role.
David van Schaick is founder of B2B marketing consultancy DVS Strategy and former CMO and board member at B2B agency The Marketing Practice.