Vistage Research - Marketing Matters: Responding to Changes in Buyer Behavior by Jay Holstine

Marketing Matters: Responding to Changes in Buyer Behavior

Marketing Matters: Responding to Changes in Buyer Behavior COVID-19 hasn’t just changed the way employees work. It has changed the way customers buy. Buyers have become more autonomous, independent and digitally driven. They have become increasingly unable or unwilling to meet face-to-face with sellers. And they have developed higher expectations and greater requirements for digital buying experiences. These behavioral changes weren’t necessarily triggered by the pandemic — many are a by-product of digital transformation — but they were accelerated by it. And that’s challenging small and midsize businesses to rapidly adapt. CEOs and marketers now have three critical tasks to face: They need to rethink their marketing strategy, reinvent their digital experiences and realign their sales and marketing teams. Building relationships is key, both for long-term customer engagement and business growth. New customers will look to establish and maintain relationships with their providers or suppliers. However, those relationships will develop through more sophisticated digital interactions, where customers and prospects self-inform, selfeducate and source information without human intervention. In most cases, buyers will only reach out to sellers when they need help with personalization, customization or integration. We experienced 15 years of behavior change in the first 30 days of the pandemic, and there is no going back to the old ways of doing things. To succeed in this new reality, small and midsize businesses need to reimagine how they connect and engage with customers and prospects. This report serves as a guide for CEOs.

In this report Part 1| Changing Buyer Behaviors Part 2| Mind the Knowledge Gap Expert Perspective | Karen Hayward

Part 3| Increased Marketing Investments Expert Perspective | Marc Emmer

Part 4| In Depth: The Digital Spend Expert Perspective | Tom Young

Part 5| Research Perspective: The Buyer Has Spoken

Part 1 | Changing Buyer Behaviors In the Q3 2021 Vistage CEO Confidence Index survey that was conducted Sept. 7-14, 78% of CEOs reported that buyer behavior has changed because of the pandemic. The survey, which polled 1,620 CEOs, also asked leaders how those behaviors had changed. Our analysis of nearly 1,000 responses revealed that the economic shutdown of 2020 created an initial shock, but buyers adapted and settled into new patterns as the pandemic waned and economic activity picked up. While different vertical markets were affected in different ways, most small and midsize businesses experienced similarities within broader changes. We have identified four main factors behind these changes:

1. Shift to digital. Many buyers are dramatically increasing their digital interactions. This is prompting more online buying, greater transaction flow and more online search. The demand to maintain engagement and digital connection with existing customers is only surpassed by the requirements of how to attract new customers and how they want to digitally interact. This is forcing businesses to rethink their digital platforms.

In their responses, CEOs said:

•

Buyers are making a “big move toward online purchasing.”

•

Buyers are conducting “far more research on their own before the sale.”

•

Buyers are making a “dramatic shift to digital; they’re doing their homework before contacting sales.”

2. Virtual Selling. Virtual selling is increasingly replacing face-to-face (F2F) interactions with salespeople. Although F2F will eventually return, it is unlikely to go back to pre-pandemic levels. Buyers have accepted and embraced virtual selling. When they do interact with sales professionals, they expect to see them exhibit high levels of competency and expertise. In addition to having deep knowledge of their products, markets and customers, salespeople must also show mastery of virtual technology and how it interacts with their customers’ experience.

In their responses, CEOs said: •

Buyers are using “less face-to-face buying.”

•

Buyers are “more willing to participate in Zoom meetings versus face-to-face.”

•

“We see fewer customers face-to-face, so digital marketing and sales collateral are increasingly important.”

3. Slowing sales cycles. While some small and midsize businesses have seen their sales cycle accelerate or customers engaged in panic buying, the majority of businesses have experienced much slower sales cycles driven by customers’ conservative, cautious buying approach. For some buyers, this is driven by uncertainty about the economy; for others, it’s driven by revenue declines or delayed potential spend. Businesses have also found that many customers have become more demanding and less willing to take risks. In their responses, CEOs said:

•

We’ve experienced “slower processes, more demanding contracts.”

•

Customers are “much more cautious.”

•

We’ve seen “lengthening sales cycles [and] more scrutiny.”

4. COVID market dynamics. The challenges of marketing and selling in a COVID economy may pass when the pandemic is behind us. In the meantime, COVID’s impact on the marketplace is significant. The absence of trade shows has impacted those that depended on F2F experiences for acquiring new customers. Supply chain challenges continue to worsen for 44% of small and midsize businesses, with only 24% saying they are slowly improving. This has lengthened delivery times and created shortages. In some cases, it has also forced buyers to stockpile or panic buy to stay operational. For some, the rising cost of everything has made price a major issue; for others, the availability of goods is more important.

In their responses, CEOs said:

•

“Cancellation of many trade shows has disrupted buying habits.”

•

“Evaluation is increasingly more centered on price and availability.”

•

.“ They have supply chain fear [that is] influencing buying habits.”

Part 2 | Mind the Knowledge Gap The buying process is fundamentally about acquiring sufficient information for the buyer to make a decision, whether they’re buying a truck or a fleet of trucks. The buyer progressively learns more about capabilities, options and needs in order to decide whether to buy, what to buy and from whom to buy. This comprises the buying process. In our research report, Building a World-Class Sales System: The CEO’s Guide, we elaborate on this concept and how buyers progressively acquire information.

At some point in the information-gathering process, buyers find they can no longer satisfy their information needs with a digital resource and must engage a salesperson for more specific details. This is known as the “knowledge inflection point (KIP).” The KIP varies greatly based on the knowledge of the buyer, nature of the product or service, and frequency and duration of the purchase. Sales and marketing alignment is essential to creating a smooth and well-coordinated buying experience. To win new customers and maintain existing ones, a process must be established to ensure the seamless handoff between the digital marketing resource and prepared sales resource. The acceleration to digital, which was a challenge pre-pandemic, has caught many sales and marketing teams unprepared. A knowledge gap exists between the digital resources provided by marketing and the desire of customers for autonomy. This becomes further complicated when the sales team is unable to meet customers where they are in their information requirements. Filling this gap must be a priority for organizations to compete and realize an advantage in a digitally driven marketplace. Sales and marketing need to realign their capabilities and responsibilities to match “buyers’ desires” for information. Marketing must develop and maintain an expanded digital relationship and align the value story with sales. Digital demand creation requires new skills for marketing and new competencies for sales. Virtual selling skills are a must-have. 6

Expert Perspective| Karen Hayward, Managing Partner & CMO, Chief Outsiders

Two things have happened as a result of the pandemic: The needs of buyers have changed, and the way buyers want to buy has changed. Understanding the impact on your business is key to capitalizing on the growth opportunities that lie ahead. People’s desire for digital interaction has completely accelerated. Buyers want to do their own research and make their own evaluations. They want to decide with which vendors to engage. They interact with salespeople later and later in the process. What does that mean for the average company? It means your strategy needs to be rooted in digital. You need to have strong SEO. Your website needs to function well from both a structural and an engagement standpoint. It needs to be much easier for people to find your business online. If you’re a B2B business, your website functions as the first sales call. If you’re a B2C business, your website is the business. Think about the buyer’s journey versus your selling process. Marketing is increasingly filling the top and the middle of the sales funnel. For that reason, make sure you’re not over-resourced on the sales end. In 99% of cases, that money would be better spent by moving it into top-of-the-funnel programs, which would give your salespeople much better leads. Your customers’ needs may have changed. Do a win-loss analysis so you can update your value proposition and go-to-market plan. Conduct a 3-3-3 survey in which you ask your employees, “What are the three strengths of the company, three weaknesses of the company and three things you would do if you were CEO tomorrow?” This will highlight both issues and strengths that you may not know you have. Leverage those strengths in your go-to-market strategy to penetrate other accounts. When you’re selling in a virtual environment, you need to slow down the sales process. There are two best practices I recommend: One, never email a proposal to a client without bringing it up in a virtual meeting and calling it a “draft review.” Walk the client through the proposal and ask questions so you build out your understanding of the problems they want you to solve. Two, map out the path to close in collaboration with your client. Figure out when they want to have the solution implemented and then work backward to figure out what needs to happen between now and then. It’s a non-intrusive way to understand the path to closure.

“People’s desire for digital interaction has completely accelerated.” Karen Hayward

Part 3 | Increased Marketing Investments With an understanding of the customer’s buying process, CEOs must ensure their sales and marketing efforts meet buyers where they are. That means aligning their marketing activities with how and when buyers identify options, researching solutions and engaging digitally, and ensuring there is a process for qualifying leads for sales. Marketing is an investment in the sales pipeline and a key component of helping small and midsize businesses reach their revenue projections. In fact, 68% of CEOs reported expectations for increased sales revenues in the year ahead. To effectively engage with customers, small and midsize businesses have also increased their marketing investments with an emphasis on their digital experiences. Our Q3 CEO Confidence Index survey revealed that 42% of CEOs expected their marketing investments to increase over pre-pandemic levels this year. Another 50% maintained their existing marketing budget.

How do you expect your investment in marketing to change this year compared to pre-pandemic levels? 2%

Increase 42%

50%

Remain the same Decrease Don't know/no opinion

Source: Q3 2021 Vistage CEO Confidence Index n=1,620

The shift to digital is clear, with 82% of CEOs directing their marketing investments to digital marketing in 2021. Traditional areas of marketing — branding, targeted marketing and demand creation — are still getting their share, however.

Which areas of marketing are you investing in this year? 82%

Digital marketing; website, social, e-commerce, text Branding

46%

Direct or targeted marketing

46% 40%

Sales support; collateral, case studies, messaging

31%

Demand and/or lead generation

23%

Marketing automation

11%

Traditional media; print, radio, TV Other

6% Source: Q3 2021 Vistage CEO Confidence Index n=1,620

CEOs need to reimagine how they support sales, develop collateral, use case studies and formulate messaging to accommodate new expectations for the buyer experience. Salespeople will have to bring true expertise and value when they connect with customers, as the frequency of their interactions will decrease. Fewer sales mean that salespeople cannot afford to “blow” a sales call.

Expert Perspective| Marc Emmer, President, Optimize Inc.

“The time is now to embrace digital.” Marc Emmer Reality is setting in on the radical shifts taking place in marketing. Digital transformation is no longer just a trend, it is now a matter of survival for companies that won’t win through traditional means such as trade shows and sales calls. The companies that can track the customer journey and convert clients based on marketing activations will have a competitive advantage over companies that have not embraced digital. The savvy marketer tracks the movements of website visitors including from which page they came, the type of device they’re using, which white papers they downloaded and what product they are most likely to buy. As much as 70% of the purchasing decision is made before a buyer talks to a human being. Those who identify their tools now will be in a position to capitalize on machine learning and artificial intelligence. This is because machine learning leverages the ability to A/B test an infinite number of options in real time. Digital transformation is hyper-specialization. The marketers who can curate content based on specific customer targets and needs will realize a higher ROI and then be able to spend more on marketing. Imagine you are a commercial real estate agent a couple of years from now. As prospects come to your website, bots will inventory their current real estate holdings, run their credit score, note their state tax rate, and build a profile on their suitability for certain types of properties. In a matter of seconds, a custom landing page is automatically built, with font styles and sizes customized to the client based on their age and gender. As algorithms track our response to their triggers, they will learn what is working and not working. Bots will continuously improve until they are materially more efficient than humans in identifying marketing levers that solicit a positive response. This is because machine learning leverages the ability to A/B test an infinite number of options in real time. While AI and machine learning may seem intimidating, the reality is that algorithms already anticipate our needs and provide curated content in the form of the movies listed in our Netflix feed, content in our social media threads and customized notifications on our phones. Algorithms will soon become commercially available to private B2B companies. AI as a service will be one of the hottest trends in 2022, enabling private companies to plug and play customer service bots, digital avatars and other AI-enabled tools. Your choice is to embrace AI or compete with it.

Expert Perspective| Marc Emmer, President, Optimize Inc.

Underlying everything are the metrics measured to gauge marketing effectiveness. According to a Marketo study, lifetime value was the most significant metric measured as it is an indicator of how much a company should spend in the front end of their funnel. Marketing should also be measured in part by direct volume generated by activations. The time is now to embrace digital.

“Your choice is to embrace AI and machine learning, or compete with it.” Marc Emmer

Part 4 | In Depth: The Digital Spend Looking deeper into how digital marketing investments are allocated, 88% of CEOs report that their website is their top area of investment. The website is the digital storefront that engages customers and prospects at all phases, helping to fulfill their quest for information about capabilities, options, pricing or even the ability to complete a transaction. Other investments made by small businesses include Search Engine Optimization (62%) and online advertising (38%), with both focusing on driving prospective customers back to the website. Social media is the second highest investment, leveraged by 80% of the small and midsize businesses investing in digital marketing. While this plays a role in funneling prospects to the website, social media also helps to cultivate followers, and engage frequently to gain familiarity and credibility early in the buying process with prospects, and to stay engaged with customers post-sale in preparation for the next buying cycle.

What elements of digital marketing are you investing in? 88%

Website

80%

Social media

62%

Search Engine Optimization (SEO) Online

54%

Content: Blogs, Video, Webinars

52%

Email marketing

38%

Online advertising: Pay-Per-Click, Display ads

27%

E-commerce Mobile marketing

16%

Source: Q3 2021 Vistage CEO Confidence Index n=1,620

“CEOs are quickly pivoting to investments and resources that enhance the digital customer experience.” Anne Petrik

In any digital platform, messaging becomes essential. This starts with online content that will build credibility and educate prospective buyers in their search for information. Marketing messaging must be clear, consistent and direct to deepen connections with qualified prospects. Buyers need to see themselves in the message that both tells a story and uses benefit-centered, outcome-oriented language. This content not only engages potential customers but helps them advance their decisions.

Incorporating thought leadership into marketing efforts is a key component of the digital marketing investment for 54% of CEOs surveyed. This online content — which includes blogs, videos and webinars — further establishes credibility and authority in the eyes of the buyer in the evaluation and selection phases of their decision. This content is a vital tool for salespeople, and it is critical to ensure that they understand the content and perspectives that the company publishes intelligently and how to respond to questions from buyers. While the rapid acceleration of changes in buyer behavior is driving change in how marketing connects with customers, this represents just the beginning. Marketing must continue to accelerate their strategies and tactics to get ahead of their customers and innovate how they connect to prepare for the next wave of growth.

Expert Perspective| Thomas Young, Founder and CEO, Intuitive Websites

Today, digital marketing is really about how your content is presented. Your content needs to be clear and direct. It needs to show empathy, understanding and knowledge of your target market. It needs to be sensitive to your audience. This starts with your website’s homepage. In many cases, your homepage is the first experience people have with your brand. Treat your website user as the hero, with you as the guide. Use storytelling to show them how you are going to enhance the quality of their life or help them solve a problem. Feature testimonials, client logos and case studies. Design your website for your target audience, rather than for your company. Regardless of whether your business is B2B or B2C, your customers will always look at your website’s navigation first. Make sure it’s simple and easy to follow. Your customer will then look at the tagline in your header. The tagline needs to align with the photo in your header and it should be very clear and direct. It must meet the “10 out of 10 rule” — that is, 10 out of 10 people coming to your website should understand what you do and the value they can get from you. Before you talk about your services and products on your landing page, talk about the benefits and stakes. What are the risks for the customer if they don’t work with you? What are the benefits if they do? Then talk about your services and products. Then talk about your plan. What’s it like to onboard with you? What’s it like to get started with you? Is it easy? Is it difficult? Does it make sense? Unfortunately, too many businesses focus too much of their content on themselves. They talk about their company history or awards and recognitions. While those things are important, you should focus most on the benefits you provide and problems you’re good at solving. Document the things your company does well in the marketplace. If you serve several different market segments, make your core benefits clear.

“You should focus most on the benefits you provide and problems you’re good at solving.” Thomas Young

Expert Perspective| Thomas Young, Founder and CEO, Intuitive Websites

Calls-to-action (CTAs) are really important. But keep in mind that if you only have CTAs at the bottom of the funnel — they basically say, “Talk to a sales rep right now” — you will lose conversions. You’ve got to have CTAs in the middle of the funnel. That’s why webinars, eBooks, gated content and so forth are incredibly important. The other thing that is missing from many small and midsize businesses’ digital marketing plans is influencers. I encourage you to proactively build a database of influencers — that is, anyone who refers to your brand — that are part of your segments in your marketing automation and email campaigns. There are influencers on social media right now that can impact your company much more than an article in The Wall Street Journal or an interview on CNN. Those influencers have the ears of your target market, and that’s much more powerful.

Part 5 | Research Perspective: The Buyer Has Spoken Buyer behavior has changed. Our research shows that 78% of CEOs report accelerating shifts in buyer behavior as the result of the pandemic. Overwhelmingly, they report that the shift to digital has radically accelerated. Responding to these changes presents an opportunity for CEOs who are ready to adapt — and it poses a serious threat to CEOs who don’t or won’t adapt. CEOs need to challenge their marketing teams to reimagine the digital experiences they offer to customers. They should focus on building a vibrant, robust, digitally based relationship with existing customers. They should use digital engagement to present a compelling journey to potential customers long before they connect them with a sales resource. This doesn’t mean sales is dead — far from it. Instead, it represents a seismic shift in how buyers want to acquire, consume and process information about products or services. It also changes the nature of their needs when they connect with a person. There will be no return to “how things were.” There will, however, be a relentless progression toward the new reality of our digital future.

“It represents a seismic shift in how buyers want to acquire, consume and process information.” Joe Galvin

Contributors Marc Emmer | President of Optimize Inc. Marc Emmer is President of Optimize Inc., a management consulting firm specializing in strategic planning. Emmer is a sixteen-year Vistage member and a Vistage speaker. The release of his second book, “Momentum, How Companies Decide What to Do Next,” was covered online by Yahoo Finance, Business Insider, CBS and NBC. Emmer has crafted strategic plans for over 150 organizations, including more than 70 Vistage members, and is also a frequent contributor to the Vistage Research Center, Forbes and Inc.com.

Joe Galvin | Chief Research Officer, Vistage Worldwide As Chief Research Officer for Vistage, the world’s leading executive coaching organization for small and midsize businesses, Joe Galvin is responsible for providing Vistage members with current, compelling and actionable thought leadership on the top issues, topics and decisions of small and midsize business CEOs.

Karen Hayward | Managing Partner and CMO, Chief Outsiders Karen Hayward is an author, international speaker, and Managing Partner and CMO with Chief Outsiders, where she is responsible for building and supporting a team of world-class marketers. Located in the San Francisco Bay Area, Karen matches mid-market CEOs and Private Equity Portfolio managers with the best-fit Chief Marketing Officers to help accelerate top-line growth. Her book “Stop Random Acts of Marketing” takes the learnings from her previous experience as a VP in both Sales and Marketing and shows mid-market CEOs how to build a strategic growth plan in the digital age to deliver compelling ROI. Inc. named her book a top 10 must-read business book for 2020.

Anne Petrik | Sr. Director of Research, Vistage Worldwide As Sr. Director of Research, Anne Petrik leads the design, deployment and analysis of CEO surveys for Vistage, capturing the sentiment and practices of the Vistage CEO community. Using her analysis, in collaboration with perspectives from experts and partners, Petrik directs the thought leadership published by Vistage research to provide small and midsize business CEOs with insights that inform on how to optimize their businesses and enhance their leadership.

Thomas Young | Chief Executive Officer/Owner, Intuitive Websites, LLC Thomas Young is a Vistage member and award-winning Vistage speaker. He has 25 years experience in marketing and sales and has helped thousands of companies increase their sales through his speaking, books, consulting and digital marketing work. Tom is the founder of Intuitive Websites, a Colorado-based website design, development and digital marketing agency. He is the author of “Intuitive Selling” and “Winning the Website War.” His third book is in the works on the subject of integrating sales and marketing teams to drive results.

About Vistage Worldwide Vistage is the world’s largest CEO coaching and peer advisory organization for small and midsize businesses. For more than 60 years, we’ve been helping CEOs, business owners and key executives solve their greatest challenges through confidential peer groups and one-to-one executive coaching sessions. Today, more than 25,000 members in 25 countries rely on Vistage to help make better decisions for their companies, families and communities. The results prove it: Vistage member companies grow 2.2 times faster than average small and midsize U.S. businesses, according to a 2017 study of Dun & Bradstreet data. Learn more at vistage.com.

About Vistage Research Vistage conducts original research and curates subject matter expertise from thought leaders to create actionable, thought-provoking insights for leaders of small and midsize businesses. Our analysis of surveys we conduct, including the WSJ/Vistage Small Business CEO survey and Vistage CEO Confidence Index survey, informs various reports. Since 2003, Vistage has published the CEO Confidence Index, which has been a proven predictor of GDP two quarters in advance. Vistage provides the data and expert perspectives to help SMB CEOs make better decisions. Learn more at vistage.com/confidenceindex and vistageindex.com.