Addressing the changing consumer
In the age of digital shopping—where the competitor is a click, swipe, or tap away—how consumers make buying decisions has drastically changed. The truth is, while the proliferation of new channels and technologies has changed the way that many marketers operate has stayed more or less the same. Gaining the advantage here needs a new way of thinking AND working. In this blog I will be looking at how we have evolved from the traditional McKinsey marketing funnel through to the Challenger Sale and finally the Challenger Customer.
The traditional marketing approach is impractical
For years, I advocated the McKinsey marketing funnel (although I referred to it as the Martini glass). The notion of the funnel is that marketers cast a broad net to capture as many leads as possible and then slowly nurture prospects through their buying journey.
But that was then. Imagine the world we were in 10 years ago. Facebook was still competing with MySpace for traffic, Amazon was primarily known for selling books, and the iPhone was had only just been released. We shopped for products very differently. Most of us still trusted brick-and-mortar stores, we didn’t have price comparison services, and we were at the mercy of large corporations for discounts. Today we have increased access to information and are well informed buyers. Buying behaviour is not linear.
57% of the purchase decision is complete before a customer even calls a supplier.” (CEB)
Customer behaviour and the importance of personas
Not everything has gone out the window. Customer intelligence has always been a competitive advantage. The only difference today is that it is much easier. Marketers are laser-focused on understanding what drives consumer decisions. Understanding the customer is a key component in building an effective and strategic marketing strategy. For marketing, using segmentation to help understand and target an audience has long been the bread and butter. Creating personas can be one of the most effective ways of bringing this customer segmentation to life. Some will argue that creating buyer personas is the most critical step in accurate marketing. Without really understanding your customers, marketers waste their efforts and resources.
Consumers Shift from Price to Value
Rewind 6 or 7 years and many of us were very excited to read The Challenger Sale by Matthew Dixon, Brent Adamson, and their colleagues at CEB Inc. (You might like to read an old review I wrote about this book here). The book came at a very important time for many marketers who were grappling with the challenges of the marketing funnel and changing consumer behaviour.
“B2B buyers are learning on their own and delaying their contact with suppliers until late in the purchase. Most B2B marketers are fighting back with thought leadership—but this simply won’t work.”
According to CEB, “Challenger Marketing” is a new approach to content marketing and lead generation that helps companies stand out from the crowd. Challenger marketing aims to “un-teach” customers something they already know or believe about how their business currently operates, to change the customers’ direction in the buying process in the marketer’s favour. The Challenger sales model is a sales approach in which the seller actively teaches their prospect, tailors their sales process, and takes control of the customer conversation.
We already know that when customers are engaging with sellers they have preconceived ideas about what products and features they want to buy and how much they’re willing to pay. With this comes a renewed focussed on selling.
Don’t sell. Coach
What we learn with the Sales Challenger is that over half of customer loyalty is a result not of what you sell, but how you sell. Customers are looking to suppliers to challenge their thinking and teach them something they don’t know. You’ve got to show them something new, and then show them why it matters. The challenger sales person uses their understanding of their customers’ businesses to deliver new insights and thinking that the customer hadn’t previously considered or fully appreciated on their own. Challengers are effective because they build constructive tension.
What this means for marketing is that marketing must shift from generating leads to generating revenue in partnership with sales. Some refer to this as “flipping the funnel”. Simply put it’s the change of fishing with nets to fishing with spears. I will cover more of this in part 3 when we look at Account Based Marketing (ABM).
The new B2B buying journey = Group buying
Of the many ways to chart the pace of change in business, one of the easiest would be to show how closely employees in different parts of the world and parts of a business now work together. People confidently use email, phone and corporate social networking tools to make big decisions that would once have felt strange without a face-to-face meeting and the incumbent travel and disruption. Not only can decisions be made more quickly but it’s made organisations flatter and more flexible.
In the B2B world, marketers have worked hard in the past few years on personalisation strategies to connect customers’ individual business challenges to the products they’re selling. Also, aligning closely with the sales teams, marketing has been fostering deeper relationships internally to help equip the sales teams with ‘challenger ready’ content. But still we had a problem. It was not quite working.
All of this, at best, does nothing to promote group consensus which is what we learn in The Customer Challenger.
Yes, the CEB’s research didn’t stop when The Challenger Sale became understood and widely followed. New insights from CEB help to explain why group buying dysfunction is a major driver of today’s price-driven, low-margin deals—even for truly differentiated and deserving solutions. These insights have inspired a CEB challenger sequel called The Challenger Customer.
This new companion volume teaches that solution buying is an even bigger problem (and /or opportunity?) than solution selling. The biggest challenge sales people face isn’t improving their own abilities to sell, but helping customers overcome their inability to reach agreement. The reality is that today’s companies aren’t just selling products or solutions. They’re selling change. Change is hard for people to buy, especially when it puts the political capital of individual decision makers at risk.
To mitigate the risk of failed purchases, companies have increased the number of stakeholders involved in their buying decisions. Today’s buying groups are made up of, on average, 5.4 people. The diversity of responsibilities, points of view and authority among these individual buyers creates conflict and buying dysfunction.
We must change the way that we engage
This is a fundamental change in buying. As marketer, we need to equip our sales team with content and sales campaigns that improve the propensity to buy. This means we need to create materials around more than simply supplier differentiation. How many products or services are we offering that our customers can’t buy elsewhere? Customers are prepared to buy ‘good enough’ which means that we need to find credible alternatives as differentiators.
We used to think of marketing and sales as two separate departments. Marketing led the lead process and then sales picked up afterwards. Now, we need to redefine the marketing selling process so that it is an integrated process. We must work from point zero through to closure together in ways that are different than we had before. Those that continue to be traditional may appear to be customer focussed but customers will make their choices and those choices will be on that which resonates with them – and the science of how we make decisions.
Customers won’t stop buying just because we are not selling to them correctly. If we do not change and we do not align with our buyers, we risk losing market share, revenue and customers.
Thanks for reading. I’d love to know what you think. Next time I will be looking at how we move from individual lead generation to targeted account based marketing.