Strategic business-to-business (B2B) marketing has the power to make a tangible impact on your bottom line. It’s important for marketing to be viewed not as an expense to be minimized but instead as an investment toward achieving sales objectives. Yet marketing shouldn’t be viewed as merely a support function of sales. Instead, marketing and sales should be symbiotic — both working in harmony with a company’s business objectives. The benefits of B2B marketing can only be realized when marketing leadership and investment work together.
Let’s take a look at evidence that marketing can generate a positive return on investment (ROI) and some data that will help you both defend and grow your B2B marketing budget.
How marketing impacts the buyer’s journey
First, it’s important to note that, when done well, marketing adds real value throughout the entire customer journey.
During the discovery phase, marketing creates the necessary awareness to help position your company as top-of-mind among prospective customers. It can anticipate common questions or objections, helping to positively predispose and inform prospects about your products and services, and make your sales force more efficient. Finally, strategic marketing can make company solutions easier to find for intended target audiences.
To measure whether your B2B marketing is effective in the discovery phase, look for the following indicators:
- Increase in organic website traffic
- Increase in social media activity
- Higher success rate with initial sales calls
As customers move into the consideration phase of their journey, marketing is what helps position your company as relevant to your target market and different from the competition. Marketing provides needed tools and content during your prospects’ research phase and can generate leads for the sales team’s follow up.
These indicators will show how effective your marketing is in the consideration phase:
- Increase in leads generated
- Increase in website page views related to content or tools
- Increase in website conversion rates
- Improved sales close rates
Even during the purchase phase, marketing is key for supporting successful new customer onboarding through useful content. Marketing can be key to positioning your support team as relevant and helpful.
Look at the following metrics to indicate whether your purchase phase marketing is successful:
- Positive customer reviews
- Improved product or service utilization rates
Marketing can help penetrate your current customer base with new, related services or products. Positive, supportive brand communication and promotion after a purchase will help to validate the customer’s choice.
One indication your marketing is working during the retention phase is an increased rate in sales per customer.
At the end of the journey, creating true advocates for your products or services is a job marketing can help with by leveraging your existing customer base for case studies, testimonials and reviews.
Measuring your B2B marketing effectiveness in the advocacy phase looks like the following:
- Number of testimonials
- Increase in social media shares
- Increase in social media engagement
Valuing share of voice
As we consider the benefits of B2B marketing, there are three terms you need to know: share of voice, share of market and excess share of voice.
- Share of Voice (SOV): Expressed as percentage, it’s the amount of marketing communication invested by one company as compared to the total amount invested within the entire industry or for a product category
- Share of Market (SOM): Expressed as a percentage, it’s the amount of sales of a specific company (or product category) compared to total industry sales
- Excess Share of Voice (ESOV): Defined as SOV minus SOM
A company whose SOV is greater than its SOM is more likely to gain market share. In other words, there’s a direct correlation between marketing investment and marketing leadership. A study from Nielsen and the IPA dataBANK indicates that a 10-point difference between SOV and SOM leads to 0.5% of extra market share growth, on average. This study analyzed 123 brands across 30 different categories of “typical” marketing (i.e. not award-winning campaigns) and is the most recent study of this scale. Here’s what the study cites as the biggest drivers of growth:
- Brand size
The study found it’s easier for large brands to maintain market share than for small brands to claim it.
- Leaders vs. challengers
On average, brand leaders achieved 1.4% of share growth per 10% ESOV, compared to 0.4% for challenger brands. Challenger brands required a higher campaign quality to achieve the same results.
- New brands and new news
Introducing a new product or service offering typically achieves higher growth per point of ESOV, although this growth is more rampant in less established product categories than in more mature ones.
- Campaign quality
The study found that the right message, communication tactics, chosen channels of communication were all necessary in achieving desired outcomes. Furthermore, “short-termism,” or not following through on a campaign, is not only just ineffective but can actually damage brand equity.
As you can see, SOV is directly tied to a company’s success and should not be devalued. Consistent, quality marketing initiatives can help you achieve and maintain your presence — and your growth.
Proving marketing initiative value
Moving beyond SOV and SOM alone, many marketing initiatives can be tracked, helping calculate the benefits of B2B marketing. There’s a simple formula you can use to help you calculate ROI:
(Sales Growth – Marketing Cost) / Marketing Cost = ROI
Outside of this formula, however, there are many ways you can measure the effectiveness of your marketing initiatives to help you defend and grow your marketing budget.
Example: cost per lead
If you know the value of a lead to your company, one major way to measure lead generation initiatives is to place a value on the leads generated through various efforts. If you’re not sure what a lead is valued at, consider the average cost spent on a trade show and the average number of leads generated to help you calculate the value of a lead.
Average marketing budget for B2B companies
According to a recent CMO study, the average marketing spending is 6.6% of a B2B company’s annual revenues.
Here’s how that spending breaks down.
And here’s how B2B companies are allocating their budgets by channel. (Note this study was done pre-COVID, so exhibiting budgets have been reallocated during this time.)
Using budgets strategically
For B2B companies to see long-term success, budgeting for marketing support must be a thoughtful balancing of needs, opportunity and resources. The benefits of B2B marketing are directly attributable to bottom line growth, and demonstrable evidence that shows marketing generates a positive ROI when done well.