*This transcript has been edited and formatted for readability.
The Reasons for Increased Investment in B2B Branding
Chris: Hi and thanks for joining us today for the "Solving for B° " podcast. In today's episode, we're talking about the rise of B2B branding. And to help me address the topic, I'm joined by Brand Strategist, Elizabeth Tindall, President and Chairman, Jonathan Fisher and CEO, Bo Bothe.
Thanks for lending your time today, guys. Today we're discussing branding in the B2B arena and how it's gained momentum in recent years.
In fact, a survey published last year by Spencer Brenneman found that over 80% of B2B companies expect to invest more in their brand strategies over the next five years with an anticipated overall increase of about 20%.
So let's start with this - To what do we attribute this increased level of focus on branding in the B2B world?
Jonathan: The world has gotten smaller. Commoditization has also driven up the need to differentiate, and differentiation usually wins for B2B when it's relevant.
Not just for the sake of being unique, but for the sake of demonstrating the added value that companies can bring to market. The internet, the ability to review companies, and the lack of control somebody has over their brand these days - all forcing these companies to continuously reinvest to keep their brand relevant and in front of what's being pushed at the buyer these days.
Bo: Speed is a big part of that now, too. When you take the internet, the ability to research different companies you could work with - finding opportunities in different companies that could serve you 15 years ago, 10 years ago - it was harder to find the 10 valve manufacturers that you could use. You could probably maybe find two of them.
So switching is going to be less frequent. Your expectations of price and service are going to be different because you've only experienced two. Now all of the different suppliers are at your fingertips and they can provide anything you want tomorrow. In the B2B realm, it's really changed people's perception of how important the brand is.
Elizabeth: Right. It used to be that sales support was more of the key driver in B2B and having that one-on-one relationship. But now it's truly the overall brand experience, how they go to market, and how that is expressed throughout the organization.
Jonathan: If you look at how millennials shop these days, they want to do it on their own timetable and devices. That old-school mentality of relationships that you just mentioned is sometimes not even part of their decision.
Chris: Branding, obviously, is not new. This is something B2C companies seem to have figured out long before the B2B guys. But it's becoming a necessary component to your strategy.
Bo: I think the big thing you have to consider is switching costs. If you worked 15 or 20 years ago with a printer, or a distributor, a car shop, or even a healthcare provider, the switching costs were great for consumers and business-to-business customers alike.
It was really hard to go find somebody else that you trusted to do the work. You also didn't have as broad a vision on pricing or quality because you'd only experienced a few options.
That made the switching costs so great, especially in the B2B world, because I know that this valve is going to work if I buy it, or I know that this syringe is going to work. And I don't really know that this one other person that's providing it can provide that. But now I've got more access to more things faster. Prices change faster. Delivery speeds up.
The speed of all of this stuff is making B2B branding even more important. It was always important, but it was built through trust, it was built through longer buying cycles, it was built through years and years of working together. And I don't think that B2B companies have that luxury anymore.
Jonathan: Well let's talk about the data behind all that, too. You just mentioned that all this information is out there; the reviews, their deliveries, their quality control metrics are all out there through reviewer sites. But also the industry has all this data at its fingertips out there now. And that allows salespeople to be more focused. So if you don't take advantage of that data, somebody else will, and they will beat you to the market.
That range of data, that type of data and the access to that data is another factor that's causing people to invest more energy into it. Because either you participate or you don't. The conversation is going to happen without you.
The Similartites of B2B and B2C Branding
Chris: I was looking at a couple of stats in preparation for the episode. One of them that I found interesting was that B2B customers are twice as likely to consider a brand that shows personal value over business value because they perceive little difference in the business value between suppliers.
We're talking about B2B versus B2C -- ultimately, you're still selling to people, right? It’s about having those relationships and addressing the needs and worries of those decision makers in those companies.
Elizabeth: It's the same thing that B2C has done. And that B2B does, to some extent. It's connecting the rational to the emotional in terms of the way you deliver. So it's uncovering, for that company, who they are at their essence and what is the experience they want to create that will then inspire that belief within their customer base.
Connecting more on an emotional level is what starts to differentiate you, versus in commoditization. A valve is a valve. There definitely is some differences in terms of engineering, but the top three are all probably pretty similar. So what is the experience? How do I feel when I work with you?
Jonathan: Talk about what's in it for me, right? What's in it for me but also what's in it for my company? You have to remember that most B2B buyers are buying not only for themselves, or their business, or their division, which is a reflection on their choices. It’s also about what they're buying for their company, the impact, the bottom line, or the acceleration, the quality control and so on.
Bo: The same valve, or the same drilling rig, or the same legal expertise at approximately the same price with little things that are better or worse – let's call it a feature. Even if it's a lawyer or a doctor, or whatever -- I can buy it slightly better. I can get it at the same time I want it.
How am I going to make a decision over who to use? The problem is, as buyers, there's a little bit of loyalty that we all have. And a little bit of ease. So if you're buying from the same person regularly, then it's easier. But that's the only difference. So how do you differentiate in that environment?
We saw it happen with law firms in the 90s and 2000s as they marketed and started worrying about brands. Law firms got business. Talk about true business to business! Johnny lawyer referred Jimmy lawyer or Johnny client referred Jimmy lawyer and that was how that business was done.
Well, now with the internet, I've got access to every attorney. I've got access to their LinkedIn profiles. I've got access to the deals they did. I can even go see what kind of cases just like mine are tried in the public.
I don't need to have a referral. The referral does give credibility, but what's happened now is, if I put out a LinkedIn post and say I need an attorney, they're all going to come back with somebody that's competent. And they're going to come back with 50 of them!
How do I make a decision? I can't meet with all 50. So what is it that drives me to want to work with that one person?
Jonathan: Brand awareness, brand differentiation, brand positioning. Those things are factors in that process.
Bo: Maybe I've heard their name five or six more times and I equate that to have greater value. But all are more emotional than in the past. “Johnny did this deal with me, you have to work with Johnny.” Okay, I don't have the time to go find somebody, and he comes highly recommended and I know he's done a deal like what I've done.
Chris: I found a tidbit that was interesting that I didn't really expect. I found that B2B customers tend to be more emotionally connected to a brand than B2C customers. Which, for me, was surprising because I would think there are consumer brands that I'm a part of. And there's a lot of case studies I read in college about B2C brands and how they try to promote a certain lifestyle rather than just a product.
Jonathan: Well, think about the deal size. When B2B is often larger, you're talking about, as a consumer, buying a coke or a piece of clothing, right? But as a B2B buyer you're often dealing with tens or hundreds of millions of dollars. So it can break you and it can kill your career, it can get you fired, it could get you into lawsuits.
Elizabeth: The risk is higher!
Jonathan: There's a lot more at stake with B2B so the brand emotionally has a much greater impact into a B2B buyer.
Chris: And Elizabeth, you mentioned that there's a lot more at stake. Frankly, there are livelihoods at stake in some instances because you could lose your job if you make the wrong call, or someone gets injured on the job because of a faulty part that you put together.
Elizabeth: There's the adage that "No one ever got fired for hiring the industry leader." Well what if you're number two? How do you sell against that?
Chris: Yeah, how do you penetrate that brand?
The Differences between B2B and B2C Branding
Chris: So we've been talking a little bit about B2B and B2C and how those differ. Are there big differences in B2B branding versus B2C? Are there certain trends that affect B2B or B2C that don't affect the other?
Elizabeth: Fundamentally, no, other than just scale.
Bo: Yeah, scale and cycles. Industry can affect a B2B company more than it can a B2C company. When oil's down, Houston slows down. But everybody's still buying sodas, everybody's still buying shirts. They may buy less of them in a certain area, but there's nothing that a B2C company can do about that.
But in B2B you still got to maintain the market share, even if it might be smaller. And I think that industry cycles have a little bit more of an impact. It's not like all of a sudden clothing is out of style. People are going buy clothes, they're just trends that people are going to follow. In some cases, some industries fall out of style.
Jonathan: Some B2B firms have a product or a service that fits a lot of industries and a lot of other applications. So their positioning and marketing can be substantially broader; whereas a fly fishing shirt is for fly fishing and you might wear it just for sun protection.
You don't often see the range of product or service in B2C that you do sometimes in B2B. And for me, some of the other differences may be that with our clients, we're often trying to demonstrate what goes on behind the curtain. To demonstrate a sense of process for quality control or transparency for differentiation, or financial impact modeling, or value chain modeling.
And you don't tend to see that type of activity too often on the consumer side. Now, if somebody may show you how they make their beer or where they source their cotton for their shirt, they may even attach it to a cause.
But some of our manufacturers or technology companies, or professional service companies, will add that level of messaging or content or visualization to their sales process or marketing process.
Bo: To Jonathan's point about the world being smaller, you just stand out more or you disappear more. That goes for B2B with sales cycles and even more so for B2C – white shirts are out, white shirts are in, right?
Those trends move a lot differently. If you're an invisible B2B company in a world where everybody's competing on a long sales cycle, you're dead. You can't keep up if you get too far behind.
Jonathan: Or long contracts. Sometimes contracts are three to seven years. I just had this client yesterday, and one of the strategies we were talking about was the difference between their selling cycles. Right now, they are one year with an auto-renewal that then goes monthly. Well, why not lock out the competitors for three, five or seven years and go to a term sale policy? And that's a strategy that you're not going to generally see on a consumer side.
Bo: Yeah, but the crazy thing is you're starting to see it in the consumer side. You're starting to see trends where consumers pay seven dollars a month for the Cinemark movie club and they get a free movie and so on. B2C is going big on these loyalty programs, but that's the same kind of thing as locking someone up in a contract.
Jonathan: Yeah. There's a difference between a loyalty program and a term agreement where you're in the lease for seven years. And that way you can't break it or sublease it, but it's different than reward systems for frequency of purchase.
Bo: Right, but when you look at how fickle a consumer purchaser is, " I'm going to jump from Cinemark to Lowes, but then I have this card, it's the same. " Now, they're different strategies, but that's the only strategy that will work in the consumer world. Although I’ve seen them, there are not often agreements to buy shirts from certain providers or three shirts a month and so on.
Jonathan: Yeah, there's loyalty strategies for B2B and it's like contract agreements, volume discounts, things like that.
Bo: I think what's happening is you're starting to see those more prevalent in both worlds in different ways. And people are trying to be creative. It's not just disruption in advertising, “Oh, I got your attention, I screamed louder so you'll come into my store.” It's becoming more about loyalty in different ways. It's not just branding.
Jonathan: Take the Dollar Shave Club. We're going ship you a razor every month. Or food delivery companies, with boxes that get dropped every month so you can cook your menus and recipes. The B2C world's moving to that recurring revenue model through frequency of purchase. And they drive it around loyalty and other types of programs.
Chris: And what we're saying, though, to bring it back to brand, is that it’s part of your brand strategy. Those are all things that you need to think of as part of your brand.
Bo: And B2B is not a buying club or affinity program, but our clients have asked us about those things. Our clients have talked to us about those tactics in the B2B world. And they are starting to collapse on themselves. Thus, branding for B2B is probably as, or more important than, B2C because you can still at least stand out a little bit in that industry.
Chris: And you mentioned having these conversations with clients, that reminded me of when we talk about websites. I know that's not the brand as a whole, but it's an expression of the brand.
When we're talking about websites, we encourage our clients to say, “Hey, maybe this isn't a one-to-one comparison, but what are websites that you as a person, would visit and enjoy the experience?" The point is that you guys have been making, is it's not all that different. It's the same principles.
Elizabeth: Right. It's still a person consuming goods or services.
Bo: Elizabeth's got it right. But the world's changing. It's no longer I come home from work and kick my feet up and don't think about work anymore. The lines are so blurred between work and life.
It would make sense that if you get used to buying something on Amazon that when you buy your $50 million drill bit, you expect the same. It's a more expensive purchase, so why isn't the process just as easy as a click?
Why do I have to talk to this person? Psychologically, people's brains, all these barriers are broken down and it's falling on top of itself.
Chris: Yeah, you said it. And Jonathan, we talked about it earlier with technology being the great equalizer. Everything kind of plays into it, you look at millennials and the way that they shop now, we want everything to be easy. We want it to be simple. We want it to be-
Chris: Right. We want everything to be streamlined. And it seems like at some point or in the past, at least, there was this, I call it red tape, but there were these processes. And as technology evolves, that seems a little arbitrary now.
Trends to look out for in B2B Branding
Chris: So what do we think is next in terms of B2B branding trends? Do we expect it to continue to gain more adoption?
Jonathan: I think technology is going to continue to broaden it for sure. If you look at what artificial intelligence and the impact it will have on direct marketing, and list management, and profiling customers, and auto content generation, and platform management.
That's already here and it's going to continue to become more normal, and more affordable, and it'll move down. Right now it's to some degree a pretty expensive investment, so you see it more on the very large corporate side of activity. But everything on a technology side tends to get cheaper and faster and simpler and scale down the food chain.
Same with augmented reality, and other visualization methodologies that are out there to show you how your products were made, or split apart, dissected, and repaired. I think that's already starting to creep quite a bit more into the B2B world.
Broadband gets faster and more global, so you can load really large image files now on corporate sites that you couldn't five or six years ago. We see a lot more video affecting how we do our storytelling on the B2B side than ever before.
Chris: So this type of technology is going to make it easier for even smaller brands to compete. It's going to necessitate the branding process and the differentiation that we've talked about. And then another component is that as these technologies become more commonplace, strategies will need to be developed as part of the whole brand to incorporate these types technologies, these types of interactions and experiences.
Jonathan: The user experiences are, like I said, compounding based on the commoditization and evolution of technologies that are out there. They're all crayons in the box. And there are more and more crayons in the box for us to choose from as strategists and marketers. So I think the job gets in some ways harder over time.
Elizabeth: Right, but I think the importance of brand just accelerates because there are so many options. It's really helping figure out what's true to the brand, what's relevant to the brand and what supports the brand. Because not everything, even though it's a trend, might be the right thing to do for certain companies.
Chris: And at the core, with your brand, we talk about all the time, you want it-
Elizabeth: To be authentic.
Chris: Right, exactly! It has to be true to who you are, what you do. You have to be able to deliver on that brand promise as opposed to just jumping on the latest trend.
Elizabeth: Brand becomes more important than ever! Everybody in the organization knows what that brand stands for, how they express it, and how to behave so that it's in alignment.
Bo: So how do you do that? Elizabeth's got a great point. How do you do that in a world where we've got a client right now that's all about personalization? That's going to be the new trend on websites.
I am from this area, I somehow have a cookie in my machine that says I make this much money, and my LinkedIn profile… I am kicked to a website that is different from the website that Elizabeth's kicked or you're kicked because it's got a different product displayed.
And we already see it in Amazon, what we've bought before. I think that that is really going to impact brands. I don't know if it's positive or negative.
We had a conversation about this in the political cycle, how a lot of these politicians are changing their stripes based on the audience that they're marketing to in social media.Or the audience they're marketing to because the data can conjure a different logo, or a different name, or a different word, or a different story based on what I've looked at before.
I can't tell whether that's going to downgrade branding because so many brands are going to be everything to everyone, or it's going to cause brand value and consistency in branding to be even more important over the long run. This organization just changes itself to be whatever I want it to be and this organization, I know it's going to be X.
What's happening is brands are coalescing around the need to be authentic. To EIizabeth's point, I need to be true to who I am. To Jonathan's point, I need to use the technologies the right way, but I'm not going to change my stripes.
So I need to go out and find the customer that fits me. And I think the companies, the B2B brands that decide, “Oh, I'm no longer just a local brand, I'm a regional brand , " or, “I'm no longer a regional brand, I'm a national brand. "
That's the only way you can grow in that environment; to find more people that are your profile that fit the way you want to deliver something.
Jonathan: Once you start having conversations with clients about it, they don't have that much ability to support it. The decision making, with logic behind all that, and the sheer volume and magnitude of assets doesn't fit a lot of people's budgets in some cases.
So it can be difficult to execute for a smaller brand. And I think you've got that desire to personalize or localize, or hyperfocus, or hyper-target running against the sense of just spreading yourself too thin.
And to Bo's point - eroding the brand - there's a balancing act that has to be held, and there's a resource conversation, there's a financial conversation that has to be held around that when you start going down that path.
Chris: Yeah, and this isn't anything that's foreign to us. We encounter it pretty regularly, but it just underscores the complexity of a brand. And that a brand is a living, breathing organism that you have to consider all these different factors. Whether it's technology, whether it's the space you live in or the change of trends in a particular industry.
Being Ahead of the B2B Branding Trend
Chris: One thing I want to talk about before we adjourn is that right now we're talking about B2B being a trend that's on the rise, that hasn't quite matured yet. But BrandExtract is 13 years old.
I'm curious, what is it that inspired you guys to found this company? What trend indicated that this could be a viable business?
Jonathan: With the advent of the internet, I think the power has shifted from corporations to individuals on a global basis now that can take down a company through platforms like social media and reviewer sites. And for me, the importance of brand was elevated substantially with that shift of control.
It became even more critical to have conversations with companies from the perspective of all of these different touch points of how the brand is impacted, their operations, their recruiting, their retention, their pricing.
You name it, there's almost nothing now that doesn't seem to have some kind of touch point within the conversation of brand. So for myself, personally, we had to elevate the conversation of brand and what it means to an organization to manage their brand.
Bo: Yeah, and what ended up happening was people would come to us and then say we need a thing and we'd start making a thing. And then we noticed more and more in the B2B space that people were saying, “Well, that didn't work.”
We used to have five or six years, no matter how good they looked or how well they were branded, quote-unquote, in the ‘80s or ‘90s, somebody was going to buy their product if it was good.
That was starting to break down. Those are the things that we saw in the late ‘90s and early 2000s that we realized something was going on here. The conversations weren't just about making a new website, or making a new brochure, or creating a new logo.
The conversation shifted to concerns that their company wasn’t working, or they weren’t selling as much as they used to, or they weren’t getting the same margins as before. Which turned into more of a conversation to Jonathan's point about brand. The website's not going to fix that problem.
The right message and the right story positioned the right way to the right customer, that'll fix that problem. And as we saw that happening, we created this organization to serve that through technology, through consulting and strategy, through execution and brand expression.
It'll be interesting to see what the next phase will be. It's definitely no longer making brochures and making things. There are things to be made, but the strategy of how a brand is structured, the strategy about how that brand goes to market.
We have a number of clients right now with those pain points. They use so many things that it's hard for them to articulate to the market what it is because they have access to more. It's easier for them to adopt a new technology, or buy a company because there's just more out there.
Jonathan: Think about it this way, don't make the thing if you can't really back it up. So all the advertising in the world, if it's not honestly supported by the product's quality, or service promise, or application solution, in today's transparent world and the speed at which news spreads it's-
Chris: You'll be found out.
Jonathan: Yeah, really fast. There's nothing I don't buy without researching it.
Bo: And quite honestly, I might be different than Jonathan.
When I do research, I'll go find a bunch of stuff, I'll see that it's all the same, and then it becomes a price discussion. And I'm talking about on the consumer side, I think it would be unfair to not think that that's going to happen in the B2B world. And how quickly that happens, how fast that happens.
We're already seeing it right now. Where a lot of people are being pulled to try and compete on price and we're continuing to say, “Look, it's not about price. It's about finding the right customer that fits the way you deliver a semi-commoditized product.”
Chris: Great. Well, guys, this has been fantastic. Thank you so much. I really appreciate it.