Barbie Mattie, Susan Macke, Craig Moore, Ian Bruce, Lori Wizdo, Amy Bills, and Jennifer Ross
Srividya Sridharan, Meta Karagianni, David Parry, Christina Schmitt, Mavis Liew, Ben Salamin, Shannon Colford, and Kate Pierpont
In Uncertainty, B2B CMOs Face The Spend-Money-To-Make-Money Paradox
For the foreseeable future, the world will continue to experience unprecedented unpredictability in economic conditions. In this environment, B2B CMOs cannot rely on replicating the marketing investment strategies from previous years and expect the same or improved outcomes. B2B marketing executives must commit to decision-making that focuses on long-term, profitable growth and resist reactive, short-term, cost-cutting decisions. While building the 2023 budget, B2B CMOs can rely on data and insights from companies that have managed to grow during a turbulent economy and emulate spend patterns (with confidence) to find certainty in the paradox of “spend money to make money.”
Benchmark Current Spending Against Your Peers
Forrester’s Marketing Survey, 2022 revealed that 51% of B2B marketing decision-makers at enterprise companies (more than 1,000 employees) that increased annual revenue by over 20% in 2021 invested 6.1% to 9% of their annual revenue in marketing. When asked about their planned marketing expense in 2022, the majority (59%) of B2B marketing decision-makers at those high-growth enterprises indicated an increase between 1% to 9%. The key is to balance the budget across the program budget categories (see Figure 1). The most critical priorities to support the marketing strategy of B2B marketing decision-makers at high-growth companies in the next 12 months are to address changing buyer behaviors (i.e., connect marketing efforts designed to drive reputation, demand creation, postsale engagement, and providing a personalized experience) and implement a purpose-driven brand:
- Programs that connect brand and demand can address changing buying behaviors. Forrester’s 2022 data shows that the greatest challenge related to achieving marketing goals at high-growth B2B enterprises is that brand perception does not reflect the desired corporate identity or business strategy. CMOs must defend investments to assess your brand vision, mission, and purpose and then determine if it meets the expectations of customers, employees, and other key constituents. CMOs should seek balance in the mutuality of brand and demand program investments by interlocking multichannel advertising approaches. The Forrester Campaign Framework is built just for this purpose. It articulates how to build out a family of related programs that work together to support a common theme aimed at a defined audience with a specific product or solution offering.
- Programs to drive postsale engagement. Customer marketing has gained more attention as organizations recognize the importance of delivering value, building loyalty, and understanding voice of the customer. According to Forrester’s Marketing Survey, 2022, a top priority for the marketing organization at high-growth companies is to focus on postsale customer engagement. B2B organizations must systematically support postsale customer engagement to retain customers, grow existing accounts, and create advocates. However, one of the top three challenges to implementing marketing programs/campaigns among B2B marketing decision-makers at high-growth enterprises was getting customer data from indirect channels. Planning and executing a customer-centric postsale experience requires attention to not only the desired outcomes and interactions an ideal experience comprises, but also to the data that supports those interactions and allows practitioners to measure success and continuously improve.
Resist Short-Termism And Invest For Long-Term Success
The easy, but erroneous choice during an uncertain economy is to make spend decisions that solve for the short term. Reactive, cost-saving decisions that satisfy the expectations of “now” could take years to undo, while having incalculable long-term effects on several aspects of the business. Before finalizing the marketing budget for 2023, it is critical to stay the course with strategies and relationships that have taken years to cultivate. Marketing expenses that support the company brand strategy and relationships with customers, employees, and partners must remain whole to prevent the disruption of long-term growth. B2B CMOs must:
- Continue to invest in digital approaches to build on previous success. Forrester’s State Of Customer Obsession Survey, 2022 indicates that customer-obsessed B2B firms are 26% more likely to prioritize accelerating their move to digital business than other B2B firms: 87% of customer-obsessed B2B firms note this is a high or critical priority vs. 69% of all other B2B firms. And they are backing that commitment up with budget. On average, B2B customer-obsessed firms spend an average of 3.4 times more than other B2B firms on digital transformation. Which digital approaches are right for you depends on your business context and customer audiences. Forrester’s Buying Motion Matrix helps to target the digital investment decisions that are most appropriate for the organization.
- Invest in efforts to secure and normalize disparate customer data sources. According to Forrester’s Marketing Survey, 2022, marketing decision-makers familiar with CMO dashboards at high-growth B2B enterprises regularly include metrics in their CMO dashboard that include: annualized customer value, customer profitability, customer wallet share, renewal/retention rates, and the number of engaged users. Doing so requires an investment in culling and analyzing customer data for a complete customer view. Invest in finding and normalizing data from disparate systems throughout the marketing and sales tech stacks, including marketing automation and customer relationship platforms, customer success platforms, support platforms, and online communities, as well as, where available, from the product itself. Defend additional investments in data, such as augmenting or updating existing data. Investing in normalizing customer data enables B2B marketing teams to disseminate actionable customer insights across the customer-facing ecosystem to fuel efficiency and contribute to customer-obsessed growth.
- Defend CX investments with an eye toward EX. No one underestimates the value of investing in customer experience. Now is the time to recognize that good employee experience drives a good customer experience. Improving employee experience equals more engaged employees. Forrester’s State Of Customer Obsession Survey, 2022 revealed 90% of B2B customer-obsessed organizations indicated that improving the experience of their employees was a top business priority over the next 12 months. B2B CMOs can distribute the cost and responsibility of employee experience, while driving alignment and demonstrating their impact to the bottom line by rallying leadership to target and engage employees with the same careful consideration as customers.
- Invest in CSR to connect EX, your brand, and customer obsession. With the ever-expanding range of global issues, all brands are being held to higher standards when it comes to corporate social responsibility (CSR). B2B organizations must navigate this new world in a way that is authentic, as they will be judged based on actions, not words. According to Forrester’s Marketing Survey, 2022, for B2B marketing decision-makers at high-growth firms who are focusing on brand and communications, the top focus area over the next 12 months to support growth is to build a brand purpose that aligns to brand vision, mission, and CSR goals. Customers are increasingly making purchase decisions based on environmental, social, and governance (ESG) criteria. Additionally, the best talent gravitates to companies that live their values, and investors are rewarding companies that lead on key ESG strategies like sustainability.
Divest To Create Balance
Many B2B C-level executives perceive marketing’s primary role as demand generation and the development of net new acquisition opportunities. Under that fallacy, most of marketing’s program dollars tend to be allocated toward those efforts. Given that the fastest path to revenue with the least amount of friction is always to prioritize renewal/retention revenue, then upsell, cross-sell, and then net new acquisitions, B2B CMOs must slice the program budget pie differently. To balance and align investments that will achieve desired growth objectives, B2B CMOs should:
- Divest in lead-focused efforts to extend beyond acquisition pipeline. Forrester’s 2022 data shows the actual buyer in the vast majority of B2B transactions is a buying group rather than an individual person (a “lead”). For 2023, CMOs must divest in net new lead acquisition and shift funds toward efforts that support opportunity type (not sourced, influenced, or marketing qualified leads) and their assorted buying groups. This shift aligns all marketing, teleservices, and sales functions to better identify, engage, qualify, and win these opportunities. According to Forrester’s Marketing Survey, 2022, one of the top two areas where marketing decision-makers at high-growth B2B enterprises who have management authority on demand and account-based marketing decisions will focus on over the next 12 months is opportunity management —optimization for target opportunity types (acquisition, upsell, cross-sell, retention).
- Reduce localization waste by adhering to your core go-to-market strategy. Content localization can be one of the biggest competitive differentiators. However, it is essential to prioritize localization efforts because localization is costly, and localizing all content is not feasible. When allocating funds for content localization, avoid the temptation to treat all geographies equally. Instead, place your bets on high-quality localization that will matter more for certain regions and roles than for others. If your company plans to grow through geographic expansion, distribute resources to the countries with the highest growth goals. Then, focus on gathering data to identify prioritized countries and their needs in terms of language, program emphasis, and tactic preferences.
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