B2B growth models and the role of research

B2B growth models and the role of research
Contents

Finding the right growth models in B2B

Sales-led B2B growth models

Marketing-led B2B growth models

Best practices – using B2B research to support growth

 

 

Finding the right growth models in B2B

To hit your targets, you need to find the right growth strategies that work for your business. When sales took a hit during the COVID-19 pandemic, the vast majority of B2B firms – 86% – made sizable changes to their strategy in pursuit of growth.

These changes included developing and bringing new solutions to market (50%), adjusting product roadmaps (36%), as well as moving into new industry sectors (28%) or geographies (26%), according to IBA International.

Often, identifying how to improve your current operations is a good strategy too. For instance, 75% of B2B firms grew their market share in 2021 if they managed to personalize their sales and marketing directly to the individual customer, according to McKinsey.

For some businesses, growth is tactical, like cutting costs to improve profits, or working out how to improve staff performance. For others, it’s more strategic, like entering new markets or diversifying products and services.

There are many ways to categorize growth strategies in B2B. One simple way to summarize the basic overarching models is to think about growth in these terms:

  • Inorganic: Breaking into a new market, expanding your customer base, or increasing your products and services via mergers, partnerships, and acquisitions
  • Organic: Expanding through current operations, using current internal resources
  • External: Creating new products or services to achieve growth via more customers, or higher-spending customers
  • Internal: Optimizing internal processes to increase revenue e.g. cutting wasteful spending, or running leaner operations through greater automation

While you can raise performance by making improvements internally, usually there’s only so much you can do here before reaching a ceiling. More exponential growth tends to come from looking outwards, thinking externally by aiming to grow organically or inorganically.

Therefore, at the heart of your strategy, you need well-informed B2B sales and marketing growth models.

Sales-led B2B growth models

Moving onto practical sales models to support business expansion strategies, the following frameworks all have B2B growth models at their core:

  • Ansoff Matrix
  • BCG Advantage Matrix
  • GE-McKinsey Matrix
  • Blitzscaling
  • Treacy and Wiersema’s Value Disciplines

The next models could be added to the above list, but while these are partly about growth in B2B, they tend to be focused specifically on new market assessment.

  • Porter’s 5 Forces
  • PESTEL and SWOT
  • 5 Cs
  • Hambrick and Fredrickson’s Strategy Diamond

Looking at each of these in detail:

#1 Ansoff Matrix

The Ansoff Matrix – first published in the Harvard Business Review, in 1957 – separates four strategies by their risk level.

  • Market penetration: The lowest risk path to growth, this is a strategy focused on expanding sales of current products in current markets
  • Product development: Introducing new products, but still in the markets you’re already in and familiar with
  • Market development: Leveraging your existing product portfolio, but taking it to new markets
  • Diversification: The highest risk strategy, but with potentially the greatest growth opportunities, this involves introducing new products to new markets

#2 BCG Advantage Matrix

Created by Boston Consulting Group in 1981, it factors in economies of scale – the size of competitive advantage – and differentiation – from taking few, to many, approaches to market.

  • Stalemate: There is little opportunity to grow by differentiation or economies of scale, but there’s an advantage to cutting business costs where possible to grow profitability
  • Volume: The business aims to be the volume and cost leader to grow, rather than by differentiating 
  • Fragmented: The business seeks competitive advantage through a differentiated, diversified product or service portfolio, rather than via economies of scale
  • Specialization: Specialized businesses can grow via both economies of scale and differentiation

#3 GE-McKinsey Matrix

A product portfolio management model developed for General Electric by McKinsey in the 1970s, it prioritizes growth opportunities by industry attractiveness and competitive strength.

  • Divest: Deprioritize or offload products or services, due to low competitive strength and low opportunity attractiveness
  • Harvest: Invest only as much as necessary in these areas, for as long as revenues exceed your investment – growth is unlikely due to either low strength or opportunity
  • Protect: Hold your position and consider adjustments to capitalize, either by growing competitive strength or finding a more attractive opportunity for your strong portfolio
  • Invest: Prioritize these business areas – they present the best paths to growth, due to a mix of competitive strength and attractive market opportunities

#4 Blitzscaling

A relatively recent idea from Chris Yeh and Reid Hoffman in 2018, this model is aimed at businesses looking to scale up rapidly despite great market uncertainty:

The four growth factors are:

  • Market size: Understanding whether the market size is big enough, but also realistically reachable
  • Distribution: Identifying distribution networks to leverage quickly and at scale
  • Gross margins: Achieving high margins that you can use to finance further growth
  • Network effects: Achieving growth by recommendations or word of mouth

The two growth limiters are:

  • Lack of product/market fit: Encountering barriers to growth due to either poor customer feedback or insufficient need for your solutions
  • Operational scalability: Failing to grow due to an inability to meet demand in time, or a combination of high expenses but low revenues

#5 Treacy and Wiersema’s Value Disciplines

Set out in the Harvard Business Review 1993, Michael Treacy and Fred Wiersema argue that for businesses to beat the competition, they must excel at one of three value disciplines. 

They argue that you have to narrow your focus to dominate your market, but firms must also be competent in the other two disciplines:

  • Product leadership: Producing cutting-edge products continuously and quickly, even if it means cannibalizing revenues or making your old products obsolete
  • Customer intimacy: Tailoring your overall offering to meet customer needs better than the competition, even if it requires significantly higher business costs 
  • Operational excellence: Leading in terms of both price and convenience, by being lean and efficient

Before moving onto B2B marketing-led growth models, it’s worth bearing in mind other models that are more focused on your market or product development strategies specifically. 

There are many other similar frameworks we could add, but these cover most of the main points:

Porter’s 5 Forces

These are the key factors for making go/no-go decisions for market entry, based mainly on the strength of your competitors:

  • The threat of new entrants
  • The threat of substitutes
  • Bargaining power of customers
  • Bargaining power of suppliers
  • Industry rivalry

Michael Porter published the framework in response to the SWOT analysis model.

SWOT and PESTEL

These models evaluate factors that may determine business success. Starting with SWOT:

  • Strengths
  • Weaknesses
  • Opportunities
  • Threats

PESTEL takes these ideas a little further, evaluating opportunities by six factors:

  • Political
  • Economic
  • Social
  • Technological
  • Environmental
  • Legal

These models work well at interrogating already identified growth opportunities, rather than setting out different paths for finding growth.

5 Cs

This is also known as situational analysis:

  • Company: Evaluating goals, performance, product line, and market position
  • Competitors: Identifying and assessing competitors
  • Customers: Segmenting your target audience e.g. by needs
  • Collaborators: Finding support to leverage in terms of partnerships or distribution
  • Climate: Running a PESTEL analysis or equivalent

Again, it’s a helpful way to analyze factors impacting a business’ chances of finding success with an already identified growth strategy.

Hambrick and Fredrickson’s Strategy Diamond

This is another useful checklist to interrogate a business’ growth plans. There are four questions to answer, shown as points of a diamond, with economic logic at the center:

  • Arenas: Where will we play?
  • Vehicles: How will we get there?
  • Differentiation: How will we win?
  • Staging: What will be the sequence and speed of our moves?
  • Economic logic: How will we make our returns?

Marketing-led B2B growth models

Whether working in tandem with one of the sales-led models above or as a standalone strategy, B2B marketing is a powerful way to grow your business – if you get it right.

The usual B2C marketing approaches don’t always work well in B2B, so you need to tailor your tactics. Growth models for B2B marketing include:

  • Prioritizing activation over brand building
  • Focusing on your share of voice and acquisition over loyalty
  • Combining rational and emotional marketing
  • Using account-based marketing
  • Aiming for fame

Taking each of these in turn:

#1 Prioritizing activation over brand building

Sales are harder in B2B than in B2C – there are fewer customers and they’re more difficult to reach, while purchases are more expensive and need more scrutiny.

Therefore, while brand-building activities are still important, growth should arrive quicker if you tilt the balance more in favor of activation activities.

According to a recent LinkedIn study, you achieve the most efficient balance in B2B by allocating 54% of marketing budgets to activation and 46% to brand building. In contrast, in B2C the typical balance goes the other way – only 38% to activation and 62% to the brand.

#2 Focusing on your share of voice and acquisition over loyalty

Loyalty is more complicated in B2B than in B2C – that’s why NPS isn’t the best B2B metric. Sometimes there’s forced loyalty – where there’s no alternative – other times there’s preferential loyalty, where customers spend more with you, but still spend with others too.

Of course, you can also grow by selling more to your existing customers. However, there is a strong direct link between increasing marketing expenditure and growing market share – even higher than in B2C, according to LinkedIn. 

You’re more likely to grow in B2B by targeting new customers, as well as your current ones. A primarily loyalty-based marketing strategy tends to yield less growth in B2B. 

#3 Combining rational and emotional marketing

Contrary to popular belief, emotions influence buyers’ decision-making more in B2B than in B2C. 

Google found that B2B purchasers are close to 50% more likely to make a purchase when seeing some personal gain or value.

To reach new customers, emotive messaging is more effective long-term. Marketing that appeals to rational decision-making is also very important, but more so once customers are already on board and making new decisions.

#4 Using account-based marketing

Decision-making units are larger among B2B customers and the B2B sales process can often take several months due to complex procurement requirements or information needs. 

To achieve growth in this context, B2B marketing needs to work in full alignment with other parts of the business – such as sales and customer service, but also product teams.

Working in silos is much less effective. If your customers have buying units formed of key stakeholders from several departments, you’ll see more growth by getting your different teams joined up and marketing to them.

With efficient, account-based marketing, you should improve your hit rate of identifying high-value clients you can keep targeting.

#5 Aiming for fame

It’s easier said than done, but if you can become the most well-known, top-of-mind brand then growth will likely keep coming.

In B2B, the holy grail is for your customers and prospects to have a mindset of “nobody ever got fired for buying IBM” – becoming the IBM of your industry will drive strong organic growth.

Marketing campaigns that increase your share of mind should translate into growth, by making your brand the one buyers think of first in purchase situations. Fame puts you on shortlists by default – it simplifies their decisions and even lets you charge a premium.

Improving your brand awareness and associations helps with this. Compared to competitors, your brand needs to be seen as compelling, credible and differentiated.

Best practices – using B2B research to support growth

#1 Use product development research to inform new revenue streams

There are wide-ranging benefits to carrying out new product development research in B2B – revisiting the sales growth models, it supports and informs strategies around these elements:

  • Ansoff Matrix: product development and diversification
  • BCG Advantage Matrix: fragmented and specialized
  • Blitzscaling: product/market fit
  • Value Disciplines: product leadership

It can help you identify gaps in your current product portfolio and find white space in the market that you can tap into.

You can forecast demand and test your sales strategy. You can also research the best pricing strategy, in terms of both the model and the price point.

In short, new product development research supports your growth strategy when it’s based on expanding your portfolio or your market reach.

#2 Segment the market to grow customer spend and reach more prospects

Segmentations help you to grow sales by targeting the right prospects. Out of your current customers, it identifies your most attractive customers in terms of who you can sell to most efficiently. 

It can also show you how to tailor your new product development to better suit different segments’ needs.

For marketing-led growth, segmentations help you find the right messages at the right stages of the buyer journey, delivered via a tailored channel strategy.

It’s a way of informing your budget and resource allocation to target growth more efficiently.

#3 Understand the buying process to improve sales strategies

By better understanding your customers’ purchase process, you can sell more efficiently too. 

Exploring the B2B buying decision-making process in detail involves learning more about your customers’ information needs, key criteria, and different types of purchases.

You also need to have a strong understanding of their decision-making unit. There are often several layers of seniority and different departments are involved.

Knowing your buyers better should translate into growth for all sales strategies. Specifically, in an Ansoff Matrix, it’s a crucial part of the low-risk market penetration approach.

#4 Track brand perceptions to improve customer satisfaction

Brand tracking measures how your business performs in terms of satisfaction, awareness, associations, reputation, authority, and more.

Interrogating the results will give you a detailed picture of where your brand currently stands and the changes required to make it stronger. 

Good recommendations will help you build a brand that is perceived to offer improved solutions to customers – and one that is true to its word.

Transforming B2B clients’ experiences leads to higher satisfaction scores, as well as up to 20% lower costs to serve them plus 15% revenue growth, according to McKinsey.

#5 Run brand development research to enhance your market position

Similarly, strategic brand development activities can lead to growth, by increasing your share of voice or aiming for fame – two of the marketing-led growth models.

That could mean making changes to your brand architecture – to reduce marketing costs, improve cross-selling, and target market segments better. 

It may also include brand name, visual identity, or logo changes, to help convey different associations. 

It can also inform the optimization of your messaging frameworks, to reach new customers and better engage with current ones. 

#6 Create compelling thought leadership and other marketing materials

Compelling thought leadership is a powerful tool to support your brand’s position as a go-to thought leader.

Again, it’s a great way to improve your share of voice and aim for fame. Robust research can identify new insights in white space, to feature in content that improves your reach.

Research can also inform your overall marcomms strategy to ensure that you’re using channels and messages as effectively as possible to support growth objectives.

Summary

Finding the right growth models in B2B

One simple way to summarize the basic overarching models is to think about growth in these terms: inorganic; organic; external; internal.

Sales-led B2B growth models

The following frameworks all include B2B growth models at their core: Ansoff Matrix; BCG Advantage Matrix; GE-McKinsey Matrix; Blitzscaling; Treacy and Wiersema’s Value Disciplines.

These models inform market assessment activities: Porter’s 5 Forces; PESTEL and SWOT; 5 Cs; Hambrick and Fredrickson’s Strategy Diamond.

Marketing-led B2B growth models

Growth models for B2B marketing include: prioritizing activation over brand-building; focusing on your share of voice and acquisition over loyalty; combining rational and emotional marketing; using account-based marketing; aiming for fame.

Best practices - using B2B research to support growth

To inform your growth strategy, we recommend that you: use product development research to inform new revenue streams; segment the market to grow customer spend and reach more prospects; understand the buying process to improve sales strategies; track brand perceptions to improve customer satisfaction; run brand development research to enhance your market position; create compelling thought leadership and other marketing materials.

Chris Wells
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