This article originates from a presentation at the Revenue Marketing Summit in New York, 2022. Catch up on this presentation, and others, using our OnDemand service. For more exclusive content, visit your membership dashboard.
Hello everyone! I'm Ty Heath, Director of Market Engagement at LinkedIn’s B2B Institute think tank. If you're not familiar with The B2B Institute, we work with leading academics and practitioners to investigate how marketing can create more value, and we're going to do exactly that today.
We’ll link buying situations to brand sales, and I'll introduce a concept called category entry points.
I want to start with an idea, the idea that most purchases start not by searching Google for a product but by searching your mind for a memory. Now, if most buyer behavior starts with searching your mind for a memory, it follows that the job of marketing is not to generate clicks but to generate memories.
Marketers are in the memory business, and I think that's pretty exciting, but before we dig any deeper into this idea, let’s get a little bit of context.
Marketing’s reputational crisis
Marketing is facing a reputational crisis right now. There's a disconnect happening: many people aren’t clear on the value that we as marketers create and bring to the business.
I think we could do better at closing that gap and building bridges, especially with our finance departments. If we can learn to speak in a language that finance understands, we’ll be in a much better position.
So where's this coming from? Well, according to a study by Forbes, only 2.6% of over 65,000 board members in their database had managerial-level marketing experience.
That’s such a tiny proportion, and it feeds into a negative cycle – according to a further study, only 4% of people on boards said that marketing was an important skill for board members to have. In contrast, 47% of the people surveyed said that finance was an important skill.
Below is a chart of current business priorities and the number of non-marketers who believe a strong brand is important in achieving them.
Those priorities include things like margin improvement, enterprise growth, future cash flow, and increased productivity – I don't think there's any doubt in our minds that marketers drive opportunity here, but there's a gap in terms of what other people feel.
One of the things we like to do at the B2B Institute is to take inspiration from other fields. We can learn a lot from the field of finance. We can learn a lot from the field of customer service. There are so many different things we can draw from, but thinking about the way finance looks at capital allocation is a great place for us to start.
When finance looks at operations, they make decisions about where to invest, where not to invest, risks, opportunities, and trade-offs before eventually deciding to invest in something at the expense of something else. That’s capital allocation. As Warren Buffett says,
"The skill with which managers allocate capital to the most financially and strategically attractive projects has an enormous impact on enterprise value over time."
Psst! Nobody cares about the funnel!
So, what does all of this mean for marketing? It means it's time for us to revisit our models and how we position ourselves. We can start with the marketing funnel. We're all familiar with the funnel. It’s probably the most recognized mental model in all of marketing, and we use it all the time.
However, at the B2B Institute, we have a contrarian point of view when it comes to that funnel. We don't believe that there's an awareness stage and a consideration stage.
What we believe is that marketers should look at customers as either being in-market or out-market for your products and services. If they're out-market, that means they're not thinking about your brand at all.
The trouble with the standard funnel we all use is that it makes us believe that it's our job as marketers to put people in-market through advertising. But advertising doesn't put people in-market – people put themselves in-market when they experience a relevant buying situation.
A better mental model is the cash flow funnel, which you can see below, behind the typical funnel. The cash flow funnel recognizes that buyers are in-market or out-market and that in-market buyers represent current cash flows and out-market buyers represent future cash flows. In that way, this version of the funnel is both customer-centric and finance-centric.
The research we did with Professor John Dawes at the Ehrenberg-Bass Institute says that 95% of category buyers are out-market at any given time. This means that the potential for growth in your business lies with future customers and the cash flows they’ll bring.
Now, of course, we have to focus our lead-gen efforts on the 5% who are in-market and we have to capture their latent demand, but the problem in the B2B industry right now is that we almost exclusively focus on that 5% – we're missing out on 95% of future buyers.
We're not priming them to remember our businesses so that we're the brands they think of when they come in-market.
By the way, in times like these when we're facing a recession, we have even fewer people in-market – the ratio might be 99:1. It’s even more important to think about how we're priming future buyers in economies like this because people may not be ready to buy right now.
Doing this work is not a matter of lead generation; it's a matter of memory generation. Let's talk about how we do that.
Messaging for memory, not clicks
This is where our new concept comes in: category entry points (CEPs). Professor Jenni Romaniuk coined this term. Here’s how she explains it:
“Category entry points are the cues that category buyers use to access their memories when faced with a buying situation.”
Take a look at this analysis of the cloud vertical that came out of our B2B Edge program. Typically, the buying situations that bring a buyer in-market for cloud solutions are scalability, reliability, and savings. Of course, these buying situations can differ from industry to industry.
Once we understand these buying situations and category entry points, we can start messaging for memory. The aim is to show our offering supports scalability, reliability, and savings.
This will allow us to better allocate our time and resources. Going back to our friend Warren Buffett, category entry points can guide marketers’ capital allocation. They allow us to align marketing dollars, attention, and time with what's going to deliver.
There's also another term to understand here: excess share of voice, which is defined as your share of voice relative to your share of the market. If your share of voice is greater than your share of the market, your brand will grow.
If your share of voice is less than your share of the market, your brand will shrink. In the example above, the excess share of voice translates into 0.5% market share growth, leading to $386 million.
We work with an ad effectiveness agency called System1. They analyze ad creative based on a one- to five-star system that predicts how effective that creative is going to be.
In the analysis we did of the global CRM market, we found that by moving from brand-led creative to CEP-led creative, we would improve our score by 1.4 points. That translates into more opportunities and, in this case, 2% growth in market share, equaling $1.5 billion.
If you haven't had your coffee yet and all those numbers are clouding your mind, the point I'm trying to make is that CEPs are crucial, and focusing on them in your creative can deliver significant opportunities for your business. Let's get into how we can do this.
How to identify your category entry points
Getting down to your priority category entry points is a three-step process.
- Elicitation: Conduct a survey asking category buyers a series of tailored questions about their buying behaviors.
- Elimination: You might have as many as 15 or 16 different reasons why somebody would buy your product. Your job is to whittle this list down to the five most relevant and actionable reasons.
- Prioritization: This is the capital allocation stage, where you prioritize where to invest.
Let’s dig a little deeper into each of these steps.
Step one: Elicitation
I’d like to introduce the W's framework. The W’s represent the different types of questions that include in your survey to start to whittle down the different reasons why somebody might be in the market for your services.
The questions in this framework fall into one of seven categories:
- Why?
E.g. Why do you want to buy this product or service? Is it to create a safer workplace? Is it to get promoted?
- Where?
E.g. Where do your staff use products in this category? Do they use it when working from home?
- With/for whom?
E.g. Will the product be approved by the board and used by junior staff?
- With what?
E.g. What integrations will you use with this product?
- While?
E.g. Will you use this product while in meetings?
- When?
E.g. Are there any times of year when your business is more likely to use this product?
- hoW? (It’s almost a W!)
E.g. How do you feel after using this product?
These questions are critical to help you understand the buying situations your customers are experiencing. I’ll show you what I mean. Imagine you’re on your way to work and you want to grab a cup of coffee – what coffee brand comes to mind?
Chances are you thought of Starbucks or Dunkin’. Now imagine it’s a Sunday morning and you’re at home and in the mood for a cup of joe. I’ll bet you thought not of Starbucks but something like Nespresso.
Those are different buying situations. We need to understand as marketers in what situations our brands come to mind. From there, we can link our brands to more of those situations and generate more opportunities.
The point of the elicitation exercise is to identify all of those different opportunities and start seeing how you can tailor your content to them.
Steps two and three: Elimination and prioritization
After your elicitation exercise, you should end up with a whole rack of buying situations and messages to choose from. Then, you'll be able to start narrowing down your list. So, how do we do that? We use the three C's:
- Credibility: How credible is my brand and/or product in this situation? Take a long hard look at your company – can you meet the demands of this buying situation? From an external standpoint, does the market see your brand as able to deliver?
- Competitiveness: How many companies compete for this buying situation? If a lot of people are playing in that space, you may not want to fight that battle.
- Commonness: How commonly do buyers enter this situation, and is the average deal size worth the investment?
Asking these questions is going to help you see in which buying situations your company has an advantage, and in which situations it’s at a disadvantage relative to competitors.
When you finish this process, you'll be left with a shortlist of options that you might invest in. That’s going to help you focus your marketing effort and budget in a way that makes financial sense.
And now for the creative part: Making compelling ads for each CEP
The steps I’ve just outlined are especially useful in helping you create messaging to strengthen your position in buying situations that people may not know you can deliver on. Let me show you a few examples of how companies have done this.
First up, we’ve got Oracle. People might not know that they have services that can support restaurant businesses, so Oracle is explicitly linking itself to that buying situation. And then there’s ServiceNow, who want you to know that they can help you deal with IT challenges. Meanwhile, Monday.com wants you to know that they help you reduce complexity.
All of these companies got to these pieces of creative by doing the type of exercise that I just shared. That helped them to understand where they can play, and they designed their creative around that.
As you do this, you want to make sure your brand assets are distinctive and not overly complicated. That's going to make it much more easily recalled. Remember, we're trying to tap memory here.
CEPs develop creative that sells
Now let me prove that CEPs work with a couple of examples from the insurance category. We have State Farm, Hartford, and Hanover.
In the study we carried out with the Ehrenberg-Bass Institute, we found that 40% of business insurance customers are aware of six or more CEPs for State Farm, and only 25% of that same category of customers don’t know about any of State Farm’s CEPs.
If you look at Hanover, it's a very different picture. 64% of business insurance customers can’t recall any CEPs for this company, and only 8% can think of six or more.
That’s reflected in State Farm and Hanover’s category penetration – State Farm is the category leader. There's a clear connection between how many situations make people think of your brand and your capacity to be the market leader.
Building CEPs in your audience’s minds also drives customer retention. Below, you can see a chart showing the probability of defection versus the number of CEPs and, again, there’s a clear correlation here. As CEPs increase, the probability of defection decreases.
Follow RMB to be remembered
I'm going to leave you with one last framework you can use to make sure your company sticks in your audience’s memory: RMB, which stands for reach, message, and brand. Let’s take a closer look.
- Reach the entire category. We’re reach maximalists at the B2B Institute; we believe that you can't predict everything, so you want to target as broadly as possible.
- Message key buyer needs. This is how you reach future buyers in a way that connects with them by proposing a solution they need.
- Brand with distinctive assets. You want to think about things like your logo, music, and the emotions you want to elicit. It’s all about tapping into the things that connect with people's memories because the brand that's remembered is the brand that's bought. If you take nothing else from this article, remember that we’re in the memory business.
Finally, a quote from Professor John Dawes, who we worked with on our CEP analysis. He said,
“Advertising works by building and refreshing memory links to the brand. So, if your advertising is better at building brand-relevant memories, your brand becomes more competitive.”
I hope this has been valuable, helpful, and thought-provoking. Most of all, I hope you’re excited to start using category entry points to create memories and build your brand.
