B2B buyers are taking more time between major purchases. How can marketers adjust?
There’s a stat doing the rounds that just 5% of B2B buyers are in the market for your products and services at any one time. That’s according to research carried out for the LinkedIn B2B Institute by the clever people at the Ehrenberg-Bass Institute.
The report states that corporations change service providers — such as their bank or law firm — around once every five years on average. That means only a fifth of business buyers are “in the market” over the course of an entire year; something like 5% in a quarter.
In fairness, this is not rocket science, nor is it especially surprising. But the 5% figure is only a guide. In practice, it varies wildly between specific B2B markets. And that matters. A lot.
Why B2B Companies Stay Married to Systems
Let’s say you’re selling an ERP system to enterprise businesses. Switching system providers is doable, though not without significant disruption and upheaval, so it would be reasonable to expect that most customers will stick with a system for around five years — a good amount of time to really understand the system’s benefits and shortcomings — before reviewing.
But if you’re the auditor at a large accountancy practice, you’ll know that it’s not unusual for clients to stick with the same firm for over 10 years — meaning that less than 2.5% of large accounts could be in market in any given quarter.
But, for a SaaS business targeting the SMB market with an average 5% monthly churn (ouch!), the numbers could be much higher — there may be 15% of buyers in market in a quarter.
Of course it’s not quite that simple, as many SaaS businesses are selling to customers who are not replacing something in a like-for-like way, but are trying to fix a new problem they’ve only just encountered. In this case, in-market buyers may account for an even higher percentage.
Related Article: Using B2B Marketing Strategies to Grow Your Business
Ready for the Long Haul in B2B?
Another marked difference is the length of time it takes to buy. While all B2B sales are long in comparison to, say, buying a pair of jeans, an SMB might select a new piece of pay-monthly software and start using it in a matter of weeks.
But most other B2B purchases sales are gnarly and can take years. The challenge revolves around getting multiple people with different agendas to agree on something that will cost their business five or six figures, with high stakes attached.
In fact, recent research by Considered Content showed that 78% of marketers agree it’s now more difficult to get consensus from buyers on sales. This is not helped by the fact that more than half (55%) of buyers are now considering a larger number of possible vendors for each purchase.
Related Article: The New Priorities of Next-Generation B2B Marketing
Demand Generation, Market Growth Are the Staples
So it’s easy to see why the blanket application of SMB SaaS rules to long cycle enterprise sales could be a poor decision. Yet, today, the strategies and tactics that marketers adopt tend to be increasingly “saasified”: by which I mean geared towards a market norm where there are lots of in-market buyers and high churn.
If you have more buyers, you can legitimately focus more on lead generation and immediate gains. But if you’re the auditing practice or the ERP system provider, falling foul of saasification could mean you’ll seriously underperform.
Because where there are fewer in-market buyers, companies must put a greater focus on demand generation and growing the market as a whole. They need to focus on being memorable among the “not-right-nows” so when these buyers do enter the market, their brand easily comes to mind. And for many B2B marketers, this is fundamentally a long game not a hit-and-run SaaS play.