2011 B2B Marketing Benchmark Report Budget Basics
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1 Special Report: 2011 B2B Marketing Benchmark Report Budget Basics Brought to you by:
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3 EXECUTIVE SUMMARY Elevating Marketing Effectiveness from Lead Generation to Sales Conversion The B2B marketing community has been humbled by the recent recession. This economic crisis forced marketers to operate with limited resources while facing a need to produce a higher level of quality leads than ever before. Through budget cuts and increased expectations, the organizations that persevered were the ones that could effectively apply the most efficient marketing tactics for every stage of the sales funnel from lead generation to sales conversion, and then close the loop with sound marketing analytics for continual improvement. B2B organizations face buying cycles of varying complexities, but at the core of all buying cycles lay three distinct commonalities: prospects, leads and customers. In the prospective phase of the buying cycle, it is essential to efficiently identify the most effective inbound and / or outbound marketing strategies for your audience and execute these tactics efficiently. In the lead stage of the buying cycle, organizations must learn to define, automate and improve on their marketing processes of communications, nurturing and lead scoring in order to enable optimal sales efficiencies. A marketer s job is not complete in the final stage of the buying cycle, where customer retention and creating brand loyalty are essential practices in maximizing the lifetime value of each customer. With signs of a potentially improving economy, organizations are taking the lessons they ve learned during the recession and are applying them with increased budgets for various marketing tactics. The key to success for these organizations will be improving their marketing efficiencies in every stage of the buying cycle, from prospects to leads and finally to loyal customers, and then closing the loop with sound marketing analytics for continual improvement. As always, we thank you for your interest in our research, and look forward to your feedback and stories of success. Best regards, Jen Doyle Senior Research Analyst, 2
4 B2B MARKETING CHALLENGES BECOMING MORE PERTINENT TO ORGANIZATIONS Q. Which of the following marketing challenges are currently most pertinent to your organization? Please check all that apply Generating high quality leads 69% 7 Generating a high volume of leads 3 44% Marketing to a lengthening sales cycle Generating perceived value in cutting edge product benefits 39% 41% 3 3 Generating public relations buzz Competing in lead generation across multiple media Marketing to a growing number of people involved in the buying process 2 33% % 34% This chart represents the growing marketing challenges B2B organizations have faced from 2009 to 2010, and nearly every challenge has been elevated in pertinence to organizations in Year after year, the greatest marketing challenge that B2B organizations face is generating high-quality leads. Organizations are combating this challenge by defining sales funnel processes that include a lead nurturing stage for non-sales-ready leads and lead scoring methodologies to determine when a lead is ready to be contacted by a salesperson so that only high-quality, sales-ready leads are delivered to the sales team. Generating a high volume of leads became a greater challenge for B2B organizations in 2010, and this is likely a result of the need to produce more leads with limited resources of budgeting and / or staffing. As B2B organizations begin to increase marketing budgets for various tactics in 2011, the process of generating a high volume of leads will be facilitated. 3
5 CHART: B2B MARKETING CHALLENGES BY INDUSTRY SECTOR Business technology Industrial / manufacturing Business services Generating high quality leads 7 80% 84% Generating a high volume of leads 33% 43% 4 Marketing to a lengthening sales cycle 3 42% Generating perceived value in cutting edge product benefits 32% 42% Generating public relations buzz 21% 30% 4 Competing in lead generation across multiple media 30% 3 39% Marketing to a growing number of people involved in the buying process 2 32% 4
6 CHART: B2B MARKETING CHALLENGES BY ORGANIZATION SIZE OF TARGET AUDIENCE Sm (<100 emp) Med (100-1,000 emp) Lg (>1,000 emp) Generating high quality leads 80% 7 7 Generating a high volume of leads Marketing to a lengthening sales cycle Generating perceived value in cutting edge product benefits 30% 30% 50% 4 39% 43% 4 39% 39% Generating public relations buzz Competing in lead generation across multiple media Marketing to a growing number of people involved in the buying process 24% 3 34% % 34% The challenge of marketing to a growing number of people involved in the buying process ranks lowest in comparison to other challenges like generating high quality leads or generating a high volume of leads, but this challenge is particularly relevant to organizations targeting medium-and large-sized organizations. The number of people involved in the buying process for organizations larger in size may be greater than that of small organizations. 5
7 CHART: B2B MARKETING CHALLENGES BY AVERAGE DEAL SIZE Sm (<$10K) Med ($10K-$50K) Lg (>$50K) Generating high quality leads 71% 80% 81% Generating a high volume of leads Marketing to a lengthening sales cycle 32% 4 43% 4 4 Generating perceived value in cutting edge product benefits 34% 3 Generating public relations buzz 30% 3 4 Competing in lead generation across multiple media Marketing to a growing number of people involved in the buying process 32% % 4 The challenges of marketing to a lengthening sales cycle, and marketing to a growing number of people involved in the buying process, are extremely relevant to average deal size wherein the larger the average deal size, the more prominent these challenges will be. For example, if a B2B prospect is considering a purchase of less than $10,000, that individual is not as likely to include other team members in the purchasing decision and draw out the length of the purchasing process as a prospect considering a purchase of over $50,000. 6
8 B2B MARKETERS INCREASING INVESTMENTS IN INBOUND TACTICS Q. Please select the statement that best describes how you expect your organization s budgets will change for the following categories in Increasing investment Decreasing investment No Change Website design, management and optimization 69% 2 Social media 69% 4% 2 Virtual events / webinars 60% 34% Search engine optimization (SEO) 60% 3 marketing 59% 3 Paid search (PPC) 49% 11% Public relations 11% 50% Telemarketing 32% 13% 54% Direct mail 24% 2 4 Tradeshows 22% 30% 4 Print advertising 1 39% 4 The majority of B2B organizations are increasing their marketing budgets for inbound marketing tactics including social media, virtual events and webinars, SEO and PPC. When considering outbound marketing tactics such as telemarketing, direct mail and print advertising, the majority of organizations are either not changing or decreasing their budgets. The growing trend of utilizing inbound marketing tactics is a result of the cost effectiveness of these marketing channels. When applied with established sales funnel processes that include a lead nurturing stage for non-sales-ready leads, and lead scoring methodologies to determine when a lead is ready to be contacted by Sales, organizations are able to effectively generate a high volume of qualified leads for their sales teams. 7
9 CHART: INCREASING MARKETING INVESTMENTS BY ORGANIZATION SIZE Sm (<100 emp) Med (100-1,000 emp) Lg (>1,000 emp) Website design, management and optimization Social media Virtual events / webinars 63% 59% 61% 5 53% 53% 69% 69% 71% Search engine optimization (SEO) 50% 60% 6 marketing 49% 5 64% Paid search (PPC) % Public relations 2 33% 39% Telemarketing Direct mail 20% 1 2 Tradeshows 10% 24% 2 Print advertising 1 19% 8
10 CHART: INCREASING MARKETING INVESTMENTS BY INDUSTRY SECTOR Business technology Industrial / manufacturing Business services Website design, management and optimization % Social media 60% 5 69% Virtual events / webinars 52% 4 59% Search engine optimization (SEO) 50% 5 6 marketing 52% 60% 63% Paid search (PPC) 44% 44% 52% Public relations 22% 3 42% Telemarketing 21% 34% 44% Direct mail 19% 1 31% Tradeshows 1 30% 2 Print advertising 11% 1 9
11 CHART: THE EFFECTIVENESS OF B2B MARKETING TACTICS Q. Please indicate the effectiveness of the following marketing tactics for your organization. Very effective Somewhat effective Not effective Website design, management and optimization 50% 43% Virtual events / webinars 43% 4 9% marketing 5 Search engine optimization (SEO) 3 5 Telemarketing 3 53% 12% Public relations 31% 60% 9% Tradeshows 2 52% 22% Paid search (PPC) 23% 5 20% Direct mail 22% 5 21% Social media 1 59% 2 Print advertising 10% 5 34% The growing trend of utilizing inbound marketing tactics is demonstrated in the above chart on the effectiveness of marketing tactics, where the top two tactics are inbound and two of the three least effective tactics are outbound. Social media is undervalued in terms of effectiveness a result of the infancy of this marketing tactic, and the low level of experience organizations have in execution when compared to more seasoned marketing tactics. As B2B marketers become more mature with their social marketing practices, perceptions on the effectiveness of this tactic will improve. In this report, we ll analyze each marketing tactic individually to understand the execution and effectiveness of each tactic for organizations of varying sizes and industry sectors. 10
12 CHART: AVERAGE LENGTH OF B2B SALES CYCLES Q. How long is your sales cycle? Please select the time period closest to the length of your organization s entire sales cycle, from first inquiry to purchase. More than 1 year 10% Less than 1 month 10% 7 12 months months 30% 4 6 months 24% When asked about the pertinence of various marketing challenges to organizations, survey respondents indicated that marketing to a lengthening sales cycle was the second most pertinent challenge to their organization in 2009 and the third most pertinent challenge to their organization in In the above chart, we gain an understanding as to just how long that lengthening sales cycle is. On average, 60% of B2B organizations experience a sales cycle of longer than 3 months. The length of sales cycles vary greatly among organizations of different sizes, industries, targets and average deal sizes, and the above chart represents the responses of all participating organizations in this year s study. Included in this report are breakouts of average length of sales cycle by organization size, industry sector, organization size of target audience and average deal size. 11
13 B2B MARKETING BUDGETS CHART: MARKETING BUDGET AS PERCENTAGE OF GROSS REVENUE BY ORGANIZATION SIZE Q. Please enter your organization s marketing budget as a percentage of gross revenue. 11% 11% % Marketing budget as percentage of gross revenue Sm (<100 emp) Marketing budget as percentage of gross revenue Med (100-1,000 emp) Marketing budget as percentage of gross revenue Lg (>1,000 emp) The large percentage of gross revenue dedicated to the marketing budgets of small organizations does not indicate an aggressive spending level by these organizations as much as it represents economies of scale. Reduced revenues in the economic recession lead to decreased percentages of gross revenue dedicated to marketing budgets for medium and large-sized organizations. While the percentage of gross revenue dedicated to marketing for small organizations remained stagnant from 2009 to 2010, dollar amounts of budgets for many of these organizations may be lower in
14 CHART: MARKETING BUDGET AS PERCENTAGE OF GROSS REVENUE BY INDUSTRY SECTOR Marketing budget as percentage of gross revenue 11% Business technology Industrial / manufacturing Business services Organizations in the business services sector tend to dedicate a greater percentage of their gross revenue to marketing expenses. This group of respondents includes the marketing services agencies that participated in this year s study, and these organizations would have incentive to make a larger investment in their own marketing initiatives in order to make a positive impression on potential clients. 13
15 CHART: THE ALLOCATION OF B2B MARKETING BUDGETS BY ORGANIZATION SIZE Sm (<100 emp) Med (100-1,000 emp) Lg (>1,000 emp) Website design, management and optimization Tradeshows marketing Search engine optimization (SEO) Paid search (PPC) Direct mail Public relations Telemarketing Social media Marketing automation / lead nurturing Print advertising Virtual events / webinars 4% 4% 2% 14% 11% 12% 12% 13% 10% 12% 10% 9% 9% 3% 4%
16 CHART: THE ALLOCATION OF B2B MARKETING BUDGETS BY INDUSTRY SECTOR Business technology Industrial / manufacturing Business services Website design, management and optimization 12% 12% 1 Tradeshows 1 19% marketing 10% 13% 13% Search engine optimization (SEO) 9% 12% Paid search (PPC) Direct mail Public relations Telemarketing 3% 9% Social media 2% 3% Marketing automation / lead nurturing 3% Print advertising 10% Virtual events / webinars 2% 3% 15
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