Dissecting imbalanced views on the importance of brand in B2B
The role that brand marketing plays in business growth in B2B is a debate that’s gone on longer than some of us have been in the industry.
It can be easy to fall into the trap of thinking everyone’s on the same page with brand marketing in B2B. Whether we agree on the extent to which brand impacts revenue growth, surely, it’s a key consideration for B2B buyers and business leaders alike?
Each and every one of you reading this will likely have a unique and contrasting view of brand. But if we were to ask you who owns the phrase “I’m lovin’ it” or “Just do it”, we’re willing to bet that 99.9% of you would instantly know the answer. This can lead us to the natural assumption that the power and value of good brand building is universally recognised, right? Think again.
Unfortunately, our Closing the CMO-CFO brand value gap in B2B report has found that not only is that assumption wrong, but also that we may not have made as much progress in convincing our non-Marketing counterparts of the value of brand as we might’ve thought.
‘Common sense’ lines of thinking like more budget for greater brand reach are anything but that. We found that a worryingly high number of B2B CFOs aren’t recognising the importance of brand marketing on revenue growth due to difficulties in measuring effectiveness – and worse yet, the majority of the CMOs we surveyed seem to agree…
On product delusion and rational fantasies
Let’s start with a thought experiment you’ve probably seen before. Imagine you’re looking for a new bank. Think about the number of banking brands you’d consider and the number you’d actually go out and research. Now admit that realistically, you’d probably stick with your current provider because you don’t have the time to set everything up at a bank you’re not already with. Or at the very least, it’d take a compellingly trustworthy proposition to warrant the jump.
If we extend this line of thinking into the world of B2B, the added complexity, time, effort, and negotiation hoops you’d need to jump through would make it unlikely you’d switch. You’d stick with what’s familiar. And familiarity is what brand marketing helps build.
The Ehrenberg-Bass Institute found that when B2B buyers need a new financial service, 47% go straight to their existing bank – with 75% of those who claim to shop around also ending up doing the same. In fact, most buyers don’t even consider more than two providers. They stick with providers that are top of mind. Again, brand.
However, we found that a whopping 84% of CFOs believe B2B buyers will purchase the best solution, product, or price. Not the best brand. This is what Peter Weinberg and Jon Lombardo of The B2B Institute call ‘product delusion’ – the belief that decision makers in B2B buy on the quality of a product, not the one that’s best known.
This aligns with the stereotype about CFOs (we know, we know) in that, due to the nature of their financially focused remit, they tend to be more rational. “B2B organisations are product-led so surely, the best product wins.” And it seems B2B CMOs are echoing this sentiment, with 71% of those we surveyed agreeing that the best product, solution, or service wins out in the end.
The brand value gap
So, if the majority of CMOs and CFOs in B2B believe that product-led marketing is more effective in driving sales than brand marketing, where does brand sit in the growth equation? In a surprise to absolutely no one, our report revealed that the two sets of business leaders place different weights on the value of brand building in B2B.
75% of CMOs believe brand health has a direct impact on the financial health of their business – in contrast to the 42% of CFOs who believe it has no impact at all. Forget singing from the same hymn sheet, the two functions are using different songbooks. However, when considering the differences in job scope between the two functions, this starts to make sense.
We found that CMOs understandably focus on areas like brand awareness and consideration, with customer acquisition coming in third on their priority lists. Whereas CFOs are more heavily weighted towards financial results – customer acquisition rates, revenue growth, and profit margin.
We get a clearer picture of why there’s such a discrepancy between perceptions of the value of brand when exploring the difficulties in measuring the effectiveness of brand marketing in B2B. 79% of the surveyed CFOs stated that there are no reliable metrics that clearly tie brand marketing to revenue growth – of which 67% of CMOs agree, admitting that proving the effectiveness and commercial value of brand is a challenge for them.
Renowned business author and advisor, Roger Martin discusses this point with Head of The B2B Institute, Eugene Schwartz in ‘The Throughline’. He states that the challenges with measuring the commercial value of brand come down to timing – brand has an ROI, but it’s measured in time frames outside of fiscal years.
Our findings seem to support this view, with 81% of CFOs of the belief that the optimum period to measure the effectiveness of brand programmes is a measly 12 months. More worryingly, an unexpected 44% of CMOs appear to agree. C’mon people. There’s an uphill creek and paddle reference somewhere in there.
The long, the short, and the wrong of it
B2B CMOs recognise what good brand marketing can achieve. 77% agree that brand marketing is a key driver of short-term sales performance. The trouble is, we found that they don’t have the confidence to do brand marketing right in their organisation.
As mentioned earlier in this piece, CFOs – perhaps obviously – prioritise different things when assessing the health of their brand. If we borrow Professor John Dawes’ 95/5 heuristic, they focus on the 5% of in-market buyers to drive what they believe is short-term performance. But this tends to be the part of the buyer journey where brand is least effective.
Perhaps framing brand and demand generation as ‘short’ and ‘long-term’ could be working against us when trying to convince CFOs of the business value of brand. It isn’t some nebulous activity that drives intangible benefits. It benefits business here in the now.
Educating the C-suite to move them away from a demand generation mindset that entrenches the long/short divide is a great first step to communicating brand’s value. Sure, B2B customers want suppliers that are seen to be safe and reliable. And short-term sales tactics often tie into the education part of the buyer journey. But to reach them, brands need to be bold and disruptive.
CMOs face an uphill struggle, though. Our report revealed that 52% of B2B CFOs disagree that brand is a key driver of short-term sales performance – a statistic compounded by the fact that only 36% of CFOs are completely confident in their CMO making effective commercial decisions relating to marketing budgets.
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We often talk about how CMOs need to speak the language of their finance counterparts. However, the question of the importance of brand marketing is a matter of finding common ground in addition to a common language.
Alignment between the two functions can only come when CMOs and CFOs see eye-to-eye about where brand sits in the growth equation. CFOs need to start seeing brand from the view of a CMO. And CMOs have a responsibility to clearly make brand’s business case, involving their Finance counterparts early in the strategic process.
Becoming a supporting pillar for the CEO in the same way CFOs already are requires accountability and internal trust built from a consistent demonstration of evidence-based decision making. Without it, senior Marketers will continue staying stuck in a vicious cycle of brand underinvestment.