The case for brand in B2B tech with Jann Schwarz, Snr Director at The B2B Institute

B2B tech marketing podcast

Here is the evidence you need to convince your CFO, CEO and the rest of the C-suite that as a tech company in a competitive space, you should invest in brand marketing. 

95% of B2B buyers are not in the market for your product or service at any given time, meaning you need to make a lasting impression so that they think of you when they are in the market. 

FINITE spoke to Jann Schwarz, Senior Director at The B2B Institute, who delivered this new research in partnership with Ehrenberg-Bass. He has plenty of ideas on how to make the case for brand marketing in B2B tech. 

Find the full research report here.

This episode covers: 

Listen to the full episode here:

 

And check out more of the FINITE B2B marketing podcast here

Full Transcript

Alex (00:06):

Hey everyone and welcome back to another episode of the FINITE Podcast. I'm very excited for this episode, as I get to sit down with Jann Schwarz, who is the Co-founder and Senior Director of the B2B Institute, a think tank within LinkedIn that studies the future of B2B marketing and decision-making to help better define the category. 

So B2B marketers like us can continue doing great work and achieving great results. They've just released a really interesting new study. You might have seen it in our newsletter recently, the FINITE times, which looks at the amount of time B2B buyers are in the market for certain solutions at any given time. And what that means for marketing in terms of long vs short-term thinking and building a brand. I can't wait to dig into this topic with Jann. I hope you enjoy it too.

 

FINITE (00:51):

The FINITE community is kindly supported by The Marketing Practice, a global integrated B2B marketing agency that brings together all the skills you need to design and run account-based marketing demand generation channel, and customer marketing programs. Head to themarketingpractice.com to learn more.

 

Alex (01:11):

Hi Jann, thank you for joining me today.

 

Jann (01:13):

It's great to be here. Thanks for having me.

 

Alex (01:15):

I'm looking forward to talking. We've got an interesting one lined up off the back of some very interesting research into the world of long-term and short-term B2B marketing. Long-term thinking, short-term thinking and all of the challenges that come with that, which we're going to dive into. Before we do that. I will, as we always do, let you tell us a bit about yourself, about your background and your current role. So over to you.

 

Jann (01:37):

I grew up in Switzerland, but I actually went to university in London and I stayed in the UK. I stayed in London for about seven years and started working in journalism and then moved into a digital media business development and strategy career, including at the BBC in London.

And then I moved to New York in 2006, working for the BBC, then did my MBA, and then started working at WBP the big ad agency holding company. And I was recruited to join LinkedIn just under 10 years ago. So I've spent the last decade at LinkedIn, starting out in agency relationship roles. 

But then I founded and built the B2B Institute about three years ago. The B2B Institute is a think tank that studies the future of B2B marketing. We want to redefine the category of B2B marketing and make it more significant, as a true entrepreneurial function within a business.

 

Alex (02:47):

Awesome. That's a good mission. Should we start by talking a little bit about this piece of research that we're going to be diving into? Maybe you can set the scene, give us a bit of context as to the research and why you undertook it.

 

Jann (03:01):

I am very excited about this piece of research for multiple reasons. The first one is we did it in partnership with John Dawes of the Ehrenberg Bass Institute in Adelaide, Australia. For those of you who do not know the Ehrenberg Bass Institute you're in for a treat. 

It's an exciting discovery because they're the best marketing effectiveness academic institution in the world. Right now, they have a massive team, a big budget, and they've been studying marketing effectiveness for decades. 

The most famous current academic working there is Byron Sharp, who leads the Ehrenberg Bass Institute, who wrote a book called How Brands Grow. And that has completely transformed a lot of B2C marketing. And we're excited to now bring this revolution to B2B marketing. And one of Byron's colleagues, John Dawes, wrote a specific study with us called the 95/5 rule. Do you want me to get into describing what it is?

 

Alex (04:07):

I'll let you introduce it. Yeah.

 

The main findings of the research in favour of long-term brand building in B2B 

Jann (04:08):

So the second thing I love about this piece of research is that the premise or the conclusion of it is deceptively simple. We are simply saying that on average, only 5% of your prospects are actually in the market for your product every quarter. And that's on average, but it is surprisingly consistent, across many different B2B industry segments. 

And it makes sense when you think about it, if you think about your own purchases in a B2B context or purchases that you're familiar with in your own company, right? How often do you buy a cloud computing solution? How often do you sign up for a new PR agency? How often do you buy the carpet for your office space? It's not that often. 

And if you look at all those different categories, you realise that on average, it's about once every five years. Maybe once every three years, right? So it's not very frequent. And even if it's a little more frequent, if you do the math, 20% of your buyers are in market right now. And 80% are out of market. That's about as frequent as it gets. 

But on average, it's more like 5% are in market. And 95% of people are out of market. And this sounds like a pretty obvious insight, but implications are actually huge because it means that advertising mostly hits B2B buyers who aren't going to buy anytime soon. And that is absolutely not how B2B marketers currently advertise. 

B2B marketers think that if you place an ad, someone sees it and then the next day they go out and they buy your product. I know that's a little oversimplified, but that's still pretty much how people think it works. And what we're saying with very simple math, which anyone could understand, it's just that the Ehrenberg Bass Institute went out and scientifically studied many, many different industries and segments and looked at these patterns. And they're consistent. 

What we're saying is this scenario where you go out and you buy a thing because you saw an ad for it the day before, that's not true for over 90% of cases. And it's kind of the opposite. Advertising works mainly by building and refreshing memory links to a brand. 

And these memory links actuate when buyers come into the market. But you have to build them before they come into the market and you have to build them in many cases, months and years before they come into the market. 

And so what you really want to do is you want to have a big part of your advertising position to build brand relevant memories. And that's how your brand becomes more competitive over time. And the question you have to ask yourself as a B2B marketer is how much of your current advertising and marketing efforts understand this mindset and are geared towards this scenario and how much of your advertising and marketing is geared towards the minority case? 

The five to 15% where people are actually in the market right now and looking to buy relatively soon? And the answer is almost all B2B companies I've talked to, the focus is overwhelmingly on 'we'll get the people who are in market right now', and that's shortsighted. 

And it also means a simple logical conclusion if everyone's doing that. And no one's focusing on the buyers who are currently not in the market. If you focus on the buyers that are currently not in market, you're going to win pretty big over the long term.

 

Why B2B companies have a short-term marketing mindset 

Alex (08:15):

Do you think that with that in mind, the reason behind companies still thinking that the short-term approach is the better approach is driven by, as you suggest, people think, 'well, let's just target the companies that are in market because Hey, life is easier that way.' 

Or maybe there's the rise of lots of digital marketing channels, which can be turned on and off quickly and rapidly. And you can try to do very short term demand gen activities. Is it both of those things? Are there other reasons beyond just kind of not thinking it through?

 

Jann (08:48):

Yeah. So I think there's more than one reason, but there's some pretty obvious ones. I mean, first off, there's the saying, when you're a hammer, everything starts to look like a nail and that's just human nature, right? 

If your job is to be a B2B marketer who helps sales sell stuff, of course you're going to start there and you're going to have a mindset that's all about where can I find more people who are going to buy tomorrow or within the next few weeks so that I can target them in a very hyper-targeted way. And I can claim credit for that. And I can go back to my organisation and say, look I'm doing my job and I'm helping the sales right? That seems like a very good idea. And that seems like that's a core part of how everybody understands their job description. 

The problem is, and that there's nothing wrong with that. But problem is, as we say in this report, this applies for a minority of the cases. The majority of the situation is actually the opposite where people don't want to buy yet. And then you're not going to see an immediate result of your activities. You're going to see a lot more long term effect. And that's always a very tough, tough thing to be able to justify internally to your company. 

Because in a corporate environment, we have a bias towards things that are easy to measure, and we obsess over the things that we can track. Peter Drucker, who's one of my favourite management thinkers, famously said, "what gets measured gets managed." And the problem is, if you mis-measure something you end up mismanaging and what we're doing here collectively as an industry is we're obsessing over the stuff that's easiest to measure. And we're therefore mis-measuring the total pool of the market because we're focusing only on people who are in market and we're therefore missing out on a lot of value creation, simply because we focus on the part of the value creation that's easiest to measure. 

So it's a real chicken and egg thing, and it gets worse because if you're a CFO, you want to track stuff that's easier to measure. You want to give budget to stuff where you immediately see an so-called ROI and you end up actually limiting the potential of your organisation. You end up limiting the potential that marketing can contribute to long-term growth of the business and value creation.

 

How to communicate to finance the need for long term budgets

Alex (11:15):

I guess the unavoidable fact is that the CMO role is often short-lived and in many B2B businesses, a lot of the data I've seen has been that CMOs' average tenure is three years or somewhere in that space. I think that spans B2B and B2C, but particularly in B2B technology where a lot of our listeners are, where they're in businesses that are VC backed or private equity backed. 

They've got big ambitious targets to hit within pretty short term timelines. Is this marketing problem just a manifestation of the environment in which businesses have to exist and grow? Do you think that's one of the reasons that this short-term thinking so regularly creeps in, or is it often the norm?

 

Jann (12:01):

Yeah, definitely. I would say it's definitely a factor of the organisational design of these companies, where there is a focus on short-term growth, there is a focus on immediate customer acquisition. And if you let that be, and you just accept that you're always going to be in this short-term hamster wheel, you're never really going to elevate the role of marketing as a strategic entrepreneurial function. 

You're just going to have marketing defined as sales support, right? It's basically just going to be about making the sales funnel more efficient, as opposed to creating a long term enterprise value, creating future cash flow for the business over the long term. And what I like about our research is that it's very simple to understand the logic of 'there's people that are not in the market there's people that are in the market'. 

Turns out that more people are currently not in market than are in market. Why are we ignoring all those people who are currently not in market because eventually they will get in market? And the way advertising works is they will remember things and they will actually prefer the stuff that they remember. And often they won't even search for other things. They will just go with the thing that comes to mind and that's going to be us and not the competition. 

It's not a difficult argument to make once you think through it. And a CFO should actually understand that because a CFO should understand that a brand is an asset like any other asset. And in order to build an asset, you need to invest in an asset. And that doesn't happen overnight. It happens cumulatively over a number of months and often years. And once you have a strong brand that's incredibly valuable and that builds competitive advantage for you.

I would ask your CFO, if you're able to have that conversation or whoever is the proxy representing the finance department that are representing the C-suite, I would ask them who are some of the companies that you most admire? Who do we want to aspire to be? 

And then invariably, they're going to mention companies that have very strong brands and I would ask them, to what extent is that brand that that company has, and the fact that you think of it so highly, because you've just mentioned it to what extent is that an asset? How long do you think it took them to get to that point? How much investment did it take? Did they measure progress every quarter? Or did they think of it more like something like a balance sheet? 

You know, if you want to use financial language say, is this more of a P and L statement kind of conversation? Or is this more of a balance sheet kind of conservation? Do you look at your balance sheet every day and see how much it changes? Or do you look at your balance sheet every quarter, every six months, because it's a long-term thing. 

I think that kind of conversation is going to help us move mindsets and reframe the way B2B marketing is supposed to create value for our business in a way that goes beyond just sales activation and being a support function for the sales org. 

 

FINITE (15:20):

The FINITE community and podcast are kindly supported by 93x, the digital marketing agency working exclusively with ambitious fast growth B2B technology companies. Visit 93x.agency to find out how they partner with marketing teams in B2B technology companies to drive growth.

 

How to communicate to the rest of the C-suite about long-term brand building

Alex (15:39):

I saw an article on Marketing Week covering the research and I think there was a quote from yourself actually. But I think you said "if your boss tells you I want all of our marketing initiatives to show a positive ROI within the next few months, you've lost the game before you've even started." 

I think you've just given some really good advice as to how to kind of meet the CFO or the C-suite and talk their language. But I think many marketers listening will be thinking, that's the kind of conversation I have with my boss. Ultimately, that's where they expected marketing. What is the solution? How can marketers kind of break free from, as you said, losing the game before you even started it?

 

Jann (16:19):

I think it is about trying to find language around we need to do two things. We need to take advantage of the existing demand that already exists for our product and services. And that's the current setup of the marketing work, right? That's all about supporting the sales or it's all about shortening and optimising the sales funnel. 

And that's a wonderful thing to do, but we need to also understand that in most cases, that is 5% of the potential value creation potential. And there's 95% that we're currently leaving on the table because humans perceive value in a very subjective way and they understand familiarity to be an indicator of quality and trust. 

And so if you're already familiar with a brand, by the time you come in market, that brand is going to have a massive advantage over any other brand. And I think what a lot of existing B2B marketers would agree with me on is there's not a lot of searching that goes on. 

And a lot of conversations with the sales teams, with clients, when they're at that point, have actually done a lot of their thinking already. They've done a lot of their research already. They've made up their mind, right? But that's a new trend that started to emerge over the last few years where people don't really come in saying, I've never thought of this, tell me why your product is good. But they come in and they say, I have an idea what I want to buy. 

And that is driven by the fact that familiarity is what drives our purchasing decisions. And so the only way you can reliably get to that level of familiarity before people have even thought of buying something is planting. There was memory structures in people's minds and using very emotional, very creative messaging to create a sense of familiarity to build this trust upfront in a way that's often quite subconscious. 

People don't fully realise that the reason why they trust you is because they've seen your logo in lots of places. And they've built up the sense of familiarity with you, but that's very, very important. And unless you start explaining how advertising really works, you're never going to get over that hump. 

If you pretend that advertising is something that's very linear, that's very predictable. It's very straightforward. You're just limiting yourself. And I know it's easier to have that conversation in the short term, but it's actually harder and it's worse for the business to defer that and pretend that it's only about the linear call to action type, demand gen advertising and not about brand building and a longer term value creation.

 

What brand building strategies should do in an economic downturn 

Alex (19:15):

What about the perspective of how to deal with marketing budgets during an economic downturn during difficult times? Like we've been through with COVID in the last 18 months or so? I think I saw some data recently from Gartner, which I think was across marketing generally, not just B2B, but marketing budgets had declined as a percentage of revenue or turnover. How do you think this study supports the view that companies shouldn't cut back on marketing budgets during a downturn or a difficult time?

 

Jann (19:44):

Yeah, I think it does. And I really hope people see that when they read the study, which by the way is available, we should plug the study because it's available completely for free. Totally ungated on B2Binstitute.org. So you can access it without, we're not asking for anything in exchange, it's available for everyone. 

I really hope it helps make the case that it's a very bad idea to cut marketing budgets during a downturn because it points out how long it takes to build positive memory structures and how powerful it is once you've built those structure and how you essentially build an asset cumulatively over time in your brand that will actually start to pay dividends for a long time to come. 

And almost in a contrary and anti-cyclical way, a lot of other studies have proven that if you are the one company that keeps spending through a downturn and building those memory structures, when clients are ready to come back, when they're ready to buy, they're going to remember you much more clearly because it takes time to build that familiarity. 

So it's in many ways, a massive competitive advantage if you have the means to afford to invest in brand. And yes, if you're about to go under, and you're worried that there's a cataclysmic economic event for your business, that might be a different scenario. But most companies are usually not in that bucket. 

Oftentimes it's just the CFO who looks at the marketing budget. The CFO thinks that marketing is a discretionary thing. It's not a strategically important thing for the business, so we can easily go and cut that and we won't see much of a change. And this is the tricky thing. If they do that, they're actually proven right in the short term cost, guess what? You don't see a big change in the short term. 

You only see a big change when your business starts falling off a cliff, which might be a year or two years from now. And so that's why the insidious effects of this are often hidden, because people apply too short of a time horizon to measuring marketing.

 

Measuring a long-term brand strategy

Alex (21:59):

Do you think that there are ways that marketers can really begin to measure brand in a way that they can go back to the CFO or the C-suite? I think the challenge that we often hear and we run into a lot through FINITE is that there's no shortage of kind of brand share, voice type tools and ways of measuring brands for big brands. 

And I'm sure LinkedIn has plenty of, of ways in which it can measure its brand. But if you're a 30 person raising a series A scale up in a niche technology category, how do you even begin to measure brand? I think is often the challenge that many marketers listening to us face.

 

Jann (22:44):

I'm not going to lie. It's not easy, right? Especially if you don't have the scale yet where you could do studies of how much unaided brand awareness is there in the market for your particular brand and specifically what we believe very important, which is influenced strongly by our colleagues at the Ehrenberg Bass Institute, is this notion of what they call consumer customer entry points. 

So are you aware of a specific brand in a specific buying context? Cause just a quick sidebar, oftentimes companies think because they're relatively well-known in the abstract that they don't have the brand awareness problem. But when you actually ask people in a specific buying situation, who do you think of, and the brand does not show up, that's actually a brand awareness problem. 

So it's about brand awareness in a relevant setting, in a specific buying situation. That's really the key metric, but I get it that that's difficult. I have a radical solution for those listening who are in the opposite scenario of no one's heard of the brand. They're trying to get big very fast. 

The CEO, the CFO is pressuring them to just focus on customer acquisition. I would start talking to them about the value of a brand in the context of the business overall, not just in the context of sales. So specifically, is it valuable to you, CFO or CEO that if people have heard of us, they find it easier to decide to come work for us. 

They might recommend us to partners. They might recommend us to investors. The media is going to cover us much more easily. If they think we're a big company with a reputation that's worth covering, which will then lead to people coming to work for us, which will then lead to us getting bigger, faster, which will then lead to us getting more investment and vice versa, right? 

There's a lot of secondary and tertiary order effects that a strong brand has on the business. And they actually matter to the CEO if he or she thinks holistically about the business. But oftentimes that's not part of the conversation because again, marketing is put in this box, that's all about you need to drive customer acquisition in this quarter. And that's the only way we're going to measure whether you're effective or not. And that's just my OPIC way of thinking. 

The fact that you were CEO can get a phone call returned from an important partner or, or get on TV to be interviewed. Those are all incredibly valuable things that might end up making the difference between a company succeeding or failing. But because it's hard to measure, it's not easy to measure because it's not a linear process.

People don't think of it as a valuable thing. And I think that's a shame and actually Rory Sutherland, who is a great friend and influence over our thinking, he talks a lot about these side effects and the idea that if you focus too much on efficiency and not enough on effectiveness, you just end up missing out on a lot of value creation potential that marketing and advertising can try for your business.

 

Examples of strong B2B tech brands

Alex (26:11):

Are there examples of B2B businesses, maybe B2B technology companies that you think have really got branding businesses that are really practicing what you're preaching?

 

Jann (26:22):

Yeah, absolutely. Without a doubt, the biggest examples I would mention is probably Salesforce. They're just, they're very good at this. And they built a very strong master brand right from the start. But then they increasingly realised what I had pointed on earlier, which is everyone knew who Salesforce was, but no one really knew in what buying situation they should think of Salesforce. 

And so they invented all these different characters. They built a thing called a trailblazer campaign, and they really were very aggressive about investing in emotionally resonant branding using cartoon characters, animated characters is very new in B2B. They really went against the grain of a lot of the conventional thinking. 

And I don't know if you saw this, they just announced that they're investing in a massive content platform that they control, where they're essentially building Netflix for their specific industry, but that's fascinating. I don't know how strategic it really was. I'm speculating here. It may have something to do with the fact that Dreamforce is a big, big conference for them where they bring the brand to life and they have a big experiential component and they clearly have to scale down that very big event for the second year in a row. 

And so they probably repurpose a lot of the budget for that to put into this new content channel. But I still think it's an incredibly bold and encouraging move to see a big company making that kind of an investment. And I think you can replicate some of the dynamics, even if you're a smaller company.

 

Alex (28:05):

I think that's the challenge, isn't it? As smaller companies think, well, yeah, Salesforce sure. With those kinds of budgets you can change the world, but how do we get started? And what can we do that starts to move the needle in the right direction here? I'm going to wrap up by asking you about what you're excited about? 

I think this piece of research is a good step forward for all of the B2B marketing industry. I think it shines a light on things that I think we've all kind of known or been talking about for a while, but now has some data to back it up. I think the whole debate about levels of investment into brand is really well supported by this. 

So I think it's a brilliant, brilliant piece of research that you've put together. Are you optimistic about the future and the world of B2B marketing and what are you kind of excited about over the year or two?

 

Jann (28:55):

Yeah, I'm very excited. I'm very optimistic for a number of reasons. A big one is that the simple fact that in aggregate, the B2B space is just growing faster than I think many other sectors. And if you look at who are the type of companies that are IPOing at the moment or doing a spec deal, or just raising a lot of money in later stage rounds, a lot of them are B2B companies. And I think the future of marketing is going to include a lot more B2B. 

And so bringing that down to an individual level, if you're a marketer who's in their early stages or the mid stages of their career, focusing on B2B brand building sounds like a pretty great bet to me, for having a phenomenal next decade or two in your profession. Because clearly there's a lot of money that's going to go towards that. And it's still sort of the wild west where there's a lot of uncharted territory that you can claim. 

And that brings me to sort of perhaps the most important point, which is if the macro environment is messy and if there's real fundamental challenges in an industry such as B2B marketing, where clearly there is just too much short-term focus, there's not enough investment in brand. That's a problem for the industry as a whole, but it's actually a massive opportunity for an individual company or even an individual marketer, because if your competitors aren't doing it yet and you start doing it, you're going to win much bigger. Right? 

If you think about this in B2C, if you have to compete on brand marketing against Coca-Cola or Unilever or Nike, that's a pretty tough job. That's a tall order because these guys are very good at that in B2B, you just have to outrun your competitors so often they don't even think about it yet. 

So think about the kind of contrarian move off what is already true, but people haven't fully realised that it's true and what is only going to become more important over time. Those are the ideas where you win big, both as an individual in your own career and as a company. And so I'm very excited. That's what makes me wake up every morning, going to work at the B2B Institute, feeling excited about the future.

 

Alex (31:24):

Awesome. I think that's great advice to wrap up on. I think the research you've done is awesome. I want to make sure that we link to the research on the website and the podcast description. So hopefully wherever you're listening, have a scroll around or look beneath the player and you'll see that there and a big thank you again for joining the podcast and sharing your thoughts.

 

Jann (31:42):

My pleasure. And please, any of you listening, connect with me on LinkedIn, I'd love to hear from you.

 

FINITE (31:49):

Thanks for listening. We're super busy at FINITE building the best community possible for marketers working in the B2B technology sector to connect, share, learn, and grow. Along with our podcast, we host a monthly online events, run interview series, share curated content and have an active Slack community with members from London, New York, Singapore, Tel Aviv, Stockholm, Melbourne, and many more to strengthen your marketing knowledge and connect with ambitious B2B tech marketers across the globe. Head to finite.community and apply for a free membership.

 

Related Posts

Older Post

How To Get Backlinks With Infographics