B2B brands need to think long-term amid COVID-19
How to survive the storm and thrive beyond
Chances are, if you’re a B2B marketer you’re facing some big challenges right now. As economic uncertainty hits top and bottom lines, businesses are becoming more vigilant in protecting their balance sheet. Making cuts to “discretionary” spend, which often includes marketing, appears to be the prevailing response to a situation which is threatening livelihoods and lives on a global scale.
Besides, whether you’ve seen a drop in demand for your products and services, or you’re struggling to keep-up with a dramatic spike, the case for investing in campaigns which drive short-term sales activity is arguably pretty weak right now.
In their place, we’re seeing a lot of the high-touch, low-cost tools at the marketer’s disposal being used to communicate empathy for customers, update them on efforts to mitigate COVID-19 impacts, and provide reassurance of continued support. The coronavirus cliches are already well-known; and for businesses really struggling financially, perhaps they’re seen as the only option.
But for others there’s a strong case to invest in brand building activity that will deliver tangible benefits long after this crisis subsides – not only seeing them through to recovery, but possibly even peak performance.
Rational vs. Emotional
‘Brand’ is a foggy concept for a lot of B2B organisations, even at the best of times. From the meaning of the word, to its potential to drive sustainable commercial advantage. And, for the rare few that do get it, faced with a myriad of barriers – from wider ignorance to operational legacies – a loss of momentum in pursuit of effective brand building is unfortunately the norm.
With the unprecedented uncertainty and pace of change created by COVID-19, there’s a high likelihood of this trend getting worse before it gets better. And it’s no surprise. Brand building taxes the mind. It pushes comfort zones. Takes time. Goes against natural inclinations. It’s the path of most resistance.
However, for savvy B2B organisations looking to not only survive this crisis, but come out of it thriving, there’s a huge opportunity in the power of brand. Offering a bigger market share and more meaningful connection with stakeholders, it’s an opportunity worth fighting for.
If your marketing is typically geared towards rational product and service messages, designed to trigger short-term behavioural responses, now is the time to consider balancing this with a more emotional and creative approach, geared towards long-term brand preferences.
Whether we like to admit it or not, we buy based on how we feel about something and rationalise later. We’re hardwired that way. Our limbic system, home to emotion, underlies the rational thinking of the newer part of our brain, the neocortex. Businesses – particularly B2B organisations – tend to ignore this, acting and communicating in the opposing direction to customers’ instincts; they expect rational behaviour, and so focus on product features and facts to try and appeal to customers’ rational sides. But, it’s the emotional qualities in ‘why’, as opposed to ‘how’ and ‘what’, that move people to act over a sustained period.
Right now, emotions are running high. Like everyone else, your customers and stakeholders are looking for support, reassurance, reason and consistency, in a time of uncertainty. Whether B2C or B2B, it’s never been more important for brands to demonstrate humanity – those emotional qualities that make us human – in order to remain relevant.
Building the business case
In building the business case for investment in long-term brand building activity, the work of Les Binet and Peter Field is a good place to start. Their highly influential IPA report, ‘The Long and the Short of It’, showed that while short-term strategies are vital for efficiency, long-term strategies are more effective at moving the dials that really matter – profit and growth.
And while Binet and Field’s original research focused on B2C brands, in 2019 they extended it to look at B2B cases. By necessity, their findings are tentative, with still relatively few B2B cases in the IPA Databank. Nevertheless there are some interesting patterns that correlate with our own experience at mark-making*, working with B2B brands over the last 25 years. Binet and Field call them the Five Principles of Growth:
- In B2B, brands that set their share of voice (SOV) above their share of market (SOM) tend to grow.
- In B2B, brands should balance the budget between long-term brand building and short-term sales activation with a 50/50 split.
- In B2B, customer acquisition strategies tend to be much more effective than loyalty strategies.
- In B2B, campaigns that aim to increase a firm’s share of mind are the most effective, and the more famous they make the company, the better the business results.
- In B2B, emotional messaging is more effective in the long-term, and rational messaging is more effective in the short-term.
Bringing these principles back to the current climate and the backdrop of coronavirus, they become even more valuable for B2B marketers. This is because of a single, simple truth: the opportunity to increase their effectiveness, building your brand and increasing your market share, is never better than in a recession. This is because your competitors – who don’t know, or fail to act on this truth – are likely to reduce or withdraw their investment in brand advertising. We’re already seeing it – in a recent survey by Marketing Week and Econsultancy, 86% of marketers said they’re delaying campaigns as a result of the coronavirus outbreak.
Mark Ritson frames the opportunity around the important concept of ESOV – excess share of voice. For those unfamiliar with the term, ESOV is the equilibrium between a brand’s share of communication in a category and the market share it enjoys as a result. He says:
“All things being equal, a company with a 10% share of voice will probably enjoy a 10% share of market. But if that company gets ambitious and doubles its ad spend, let’s say from £2m to £4m, we also know something special starts to happen. Assuming competitors do not respond, the brand’s share of voice has just doubled to 20%. That means that its share of voice (20%) is 10 points in excess of its current market share (10%). It has an ESOV of +10. If that excess is maintained, the brand will pick up around 0.5% in market share each year until the equilibrium is restored and its market share reaches 20%.
“In a recession something different, but even more magical, happens. As many brands in the category pull all – or most – of their advertising spend, the relative value of maintaining an advertising budget becomes significantly more compelling. Let’s say all the companies in your category halve their ad spend, for example. Suddenly your £2m budget that was 10% of the total share of voice now doubles to 20% as a result. Market share gains then ensue.
“The reason the recession is such a fertile place to grow market share has nothing to do with the downturn itself or its impact on consumers. It’s because competitors pull back and you – hopefully – do not.”
So while recessions are short-lived, the effects of your marketing will be anything but.
Fortune favours the bold
I think it’s important to say at this point that this article is not about profiteering from a crisis, nor intended to downplay the seriousness of the situation. I know there will be marketers reading this with near to no budget, a significantly reduced team, or on furlough themselves.
But there will also be others – probably in larger organisations or sectors less affected by the pandemic – who still have cards to play. I’m appealing to them to buck the trend of B2B marketing and embrace the power of long-term brand building activity. Far from being a cost to their business, it is the most valuable investment they can make right now. Fortune favours the bold, and if this isn’t you, your leadership team, your business – it will surely be someone else’s.