B2B companies need an ‘injection of marketing mentality’ in the boardroom

To innovate and grow, B2B firms need more marketing representation at non-exec level. More psychological forms of differentiation are required, and illustration that not everything that is costly is necessarily a cost.

Marketing brainI write this from Britain, which is now on the uncertain road to recovery following the initial shock of the Covid-19 crisis. Other countries and cities are still deep in that first phase.

At this point it is impossible to know the lasting effects on business behaviour. But it has certainly become doubly clear that narrow ideas of self-interest are completely insufficient to describe and predict human action.

In the past 10 years, behavioural science has helped provide a framework for a new and more nuanced approach to understanding behaviour – and with it added a new facet to consumer marketing. It has done this by challenging two convenient but erroneous assumptions about how people decide and act.

First, it has confirmed scientifically something many marketers have long suspected – that consumers cannot always accurately describe their motivations or predict what factors might be decisive in influencing their behaviour.

Second, it has catalogued many instances where patterns of human behaviour consistently deviate from those predicted by conventional, self-interested economic axioms.

No one is claiming that behavioural science is an exact science. But it does present the marketer with an entirely new experimental space. And one which is more valuable since it allows for butterfly effects: cases in which very small and inexpensive changes can lead to extremely valuable results.

The fear is that this quiet revolution will fail to deliver the same value to B2B marketing as it has and will deliver to consumer marketing. The prevailing assumption may be that the twin lenses still work well for B2B marketing, since business decisions, unlike consumer decisions, are “entirely rational”, and made by people who are perfectly capable of describing their needs. This is untrue. In fact, behavioural science may end up with a greater role to play in B2B than in B2C marketing. Apart from anything else, the question of business biases has been explored very little, so the potential is immense.

Customers decide metrics not companies 

If there were more behaviourally-informed marketers in a host of organisations that currently has no access to this thinking, it might end such companies’ mistrustful attitude to psychological value – and as a result release a great deal of extra value.

This doesn’t only apply to B2B; it is also commonplace in almost all organisations with a strong technical, financial or engineering culture. People who run railway companies obsess about punctuality and speed. What they need to be told is that, if you keep customers informed of delays throughout the journey, and explain the reasons, people are much less annoyed. It also means they can break the bad news to their clients gently in advance, rather than arriving at a meeting late and in a flustered condition.

In most internal functions of business (HR is an obvious exception), objectives can be defined in very simple, objective terms. Speed, time, weight, cost. Success can be defined in advance, and progress can be measured against these aims. When put into practice with human beings, the rules will never be so neat. Good organisations need to learn to lose their aversion to ambiguity.

In marketing, the metrics that matter are defined by the customer, not by the organisation.

These metrics may change over time. And vary enormously between different customers and different marketing strategies.

How B2B marketers are winning the battle for hearts and minds

In a business culture which is obsessed with quantification and measurement, there is an ever- present risk that the need for accountability makes the value created by marketing smaller rather than larger. If you spend your money doing only what can be proven to work, you may be missing out on things which are more effective but less demonstrable. You will also focus disproportionately on short-term wins over long-term value creation.

This is inclined to happen in any organisation with an expensive sales function, since sales will tend to dominate marketing. Sales will principally judge marketing as a source of leads, especially in the short term. This is by no means an unimportant function of marketing, but it is a narrow activity, not a state of mind. By narrowing the remit of marketers down to a single purpose or metric, you will end up trying to optimise the wrong thing.

Or, equally, by demanding that marketing expenditure is wholly accountable, and maximally efficient, you may confine your communications to low impact, highly-targeted media which fail to deliver any of the wider benefits of fame, and which fail to reach influencers (IEUs) and other colleagues who may still be involved in ratifying the final decision.

As I mentioned at the start of this article, marketing is probabilistic, not deterministic. You cannot define its effects fully in advance, nor measure them fully in retrospect. It is valuable for a business to be famous in all kinds of ways – because fame vastly increases a business’s scope of possible opportunity.

At a simple level people cannot buy from you if they do not know you exist. But they cannot buy confidently from you if they have never heard of you before.

As fame increases, other possibilities will present themselves that you could not possibly have predicted. Suddenly people return your CEO’s phone calls. You attract investment. Your stock value rises. Other businesses approach you, suggesting partnerships. People bring you new ideas. Better candidates demand less money to work for you to enhance their resumés (and LinkedIn profiles). They work for you for longer. You win more bids. Your employees feel 20% cooler at parties. In none of these cases can the ends be predetermined or the full value quantified.

Marketing is probabilistic, not deterministic. You cannot define its effects fully in advance, nor measure them fully in retrospect.

Does that mean you should make no attempt to be more widely known? I don’t think so.

What is interesting here is that individuals, when it comes to their own brands, understand the probabilistic nature of opportunities instinctively. They spend hours polishing their LinkedIn profiles with no specific audience in mind and attend as many networking events and industry functions as they can – without performing a cost-benefit analysis in advance. Yet when businesses perform these functions, they proceed on the convenient fiction that everything is knowable, and success must always be the kind you plan for in advance.

But wider fame often works better than narrow focus.

Take a big idea from B2B: American Express’s “Small Business Saturdays.”

This is an idea whose principal focus is to build relationships with many small retailers and restaurants. But to measure it exclusively by its success in acquiring and maintaining the footprint of smaller stores which accept the card would be to undervalue it. It has resonance far beyond the intended audience,  and may contribute as much value in driving card member loyalty as it does in creating card acceptance from merchants.

This provides a glimpse of what B2B marketing could do if it were to consider a broader remit for marketing ideas.

A simple first step to putting this right

A marketer at board level, armed with the right amount of behavioural science could challenge these assumptions, and could point-out the risks of decision-making biases in all manner of internal decisions.

But above all, the injection of a marketing mentality into a senior position in a B2B company could help that company innovate and grow, by suggesting new psychological forms of differentiation, and by pointing out that not everything that is costly is necessarily a cost. This would challenge the mindset typically deployed in board meetings – where, as Professor Jules Goddard explains, “a balance sheet containing seven cost lines and one revenue line leads to costs and earnings being discussed in that same ratio.”

What might be an important first step to obtaining this? For one, in all organisations, especially in B2B, at least one non-Executive Director should be sought from a marketing, media or psychology background. This will help the cognitive diversity of decision-making.

We also need to use behavioural science to update the language of marketing in terms that are more board friendly, and more science friendly. The language and vocabulary of behavioural economics, sharing much terminology with the language of finance, can only help here.

Our long-standing pretence that psychological effects shouldn’t count does wonders for making us look rational and scientific. But it costs us very dear – in money and in health.

 This is an extract from “The Objectivity Trap: On the biases and misconceptions that cause us all to undervalue B2B Marketing”, written by Rory Sutherland in partnership with The B2B Institute, a think tank funded by LinkedIn which researches the future of B2B advertising and decision making.

Rory Sutherland is vice chairman of Ogilvy UK and founded Ogilvy’s behavioural science practice.