How the Buyer Journey Has Changed Forever - A Meta-Analysis of the Market

Meta-Analysis Sources: Bain, McKinsey, Gartner, G2, TrustRadius, and the Jolt Effect by Matthew Dixon & Ted McKenna

Highlights

• 83% of buyer journey is self-directed; 5% of the time is spent with you & 12% with other vendors. (Gartner)

• Virtually 100% of buyers want to self-serve all or part of journey, up 13%. (TrustRadius) 

• 80-90% of buyers have list of vendors in mind before doing research. 90% choose vendor from that list. (Bain/HBR 2023)

• The B2B buying process is complex. 80% of B2B have buying committees. 22 distinct roles are involved in the process. (G2)

• 70% of B2B decision makers open to new, fully self-serve purchases in excess of $50,000. 27 percent would spend more than $500,000. 12% would do $1M+.  (McKinsey)

• SaaS contracts are shorter. More than half of software contracts are for fewer than 6 months and only 11% last more than two years. (G2 2023)

• The importance of the vendor’s sales team is declining. 68% of B2B buyers only involve the vendor’s sales team at the last stage of the buying process. (G2)

• 77% of firms with 1,000-5,000 employees want self-serve; 89% from firms of 5,001-10,000. (TrustRadius) 

Transcript from Episode 3 of Good Revenue

Welcome to Good Revenue. Today, we're going to talk about the buyer journey, specifically relating to B2B. In all the years that I've worked with companies, both in house and as an advisor or consultant, I have always felt like something wasn't quite gelling between marketing and sales and the customer. I generally wanted to be working on longer term programs and strategies, especially when it came to content.

When I looked at our data, it was clear customers responded positively to those programs. When  we looked at the analysis, we could see that our content  answered tricky and complicated questions, and customers found those to be helpful. 

Our marketing  teams were always expected to focus on MQL targets and lead gen. And that was pretty frustrating to me because our sales counterparts were never excited about these MQLs. I really  struggled to understand why we were being asked to focus on lead gen with no regard to quality, when it was very clear to me that there were higher quality programs and plans that actually drove revenue, not just pipeline, but acquisition and retention of customers. And how did I know this? Well, in one example, it was because we built custom attribution models. So I could prove that we were contributing to the business, not just to lead gen.  It took me a long time, maybe too long, to figure out what was happening.

And my conclusion was this. We were being asked to run go-to-market "the way it had always been done." And you have to kind of imagine that in all caps. I am sure that in 2005 or even in 2010, all of the tactics, including MQLs made more sense to everyone. Customers were dependent on vendors. Strong sellers had real relationships with buyers.

And while the technology industry in particular was growing, there weren't 50 million options for every possible category the way there are today. I'm using technology because while we work with a lot of different companies, and I've had experience in a lot of different companies, we do a lot of work in tech.

Tech is where I've seen some of the more acute challenges around the evolution of the buyer journey. That evolution has had a huge effect on businesses, on acquisition, on retention, on business models, and really on go to market and product strategy. And that's because the  world has changed a lot in the last 20 years in almost every sense.

That change just hasn't quite crystallized in B2B sales and marketing and product, because I do think there is some dysfunction because of the buyer journey that catalyzes on the product side as well.  So over the years, as I've been digging into this problem and trying to understand what was going on, I kind of wanted to know.

What was the story with the buyer journey? Was I just off or was there something else that was going on? And if so, what could we do about it? What could I do about it? So I wanted to just talk you through some of the data that I've come across in the last few years. I want to take you through what this data is telling me and where I think we can go from here.

So here's the starting point. I think it's pretty hard to sell almost anything these days, especially if you have a complicated offering with a long sales cycle or high dollar value. I think it's tough. Obviously, the markets are uncertain lately. We've just been through or maybe are still in a non recession and that's been going on for at least a year and a half. The U.S. as well as everywhere else in the world  struggled  through two and a half years of COVID. That was pretty challenging.  

But the problems that I noticed predate all of that. And this is kind of the laundry list of my observations. So when I look at actual data, here's what I found.  

I found a piece of research from Gartner, of all people, from 2019 which tells us 83 percent of the buyer journey is fully independent of vendors.

That means that buyers are doing their own research. They are getting opinions from people they trust. They're even finding pricing. All sorts of things that used to happen in a sales process, 83 percent of that time is now independent, self directed. 17 percent of the journey, the remainder, is spent with multiple vendors.

And their estimation was that just 5 percent of the buyer journey is spent with your firm. Now, I thought this was absolutely shocking. I was really, really surprised by this. And the reason was that I have seen over years a huge investment when it comes to the commercial budget for any company directed towards sales.

From our primary research, 70 to 80 percent of commercial budgets go towards sales organizations. And that's not a knock on sales teams, but from a business perspective, I was really struggling to understand this because if only 5 percent of the opportunity is actually with the sales team, this budget allocation is overinvestment -- to have that much of resources focused on the very tail end of the buyer  journey.

Effectively, you're giving up the opportunities to educate and influence much earlier in the buying journey.  So we under invest in marketing. And I think that's because we don't have a framework or measurement that is universally accepted by CEOs, CFOs, and by some Chief Revenue officers.

The challenge is that because we don't let marketers sell to people who aren't in market yet. Our go-to-market right now is only good at shaking the tree for people who are already ready to buy and the sad reality is it's too late. Those folks already made their decisions. And this isn't just my opinion, this is supported by the data.

One piece of research came from Bain & Company. They published research in the Harvard Business Review in 2022 which shows that 80 to 90 percent of buyers have a list of vendors in mind before they do any research. 90 percent of buyers choose a vendor from that day one list, as they call it.

That is not great if you are operating go-to-market from this perspective — you're really expecting your sales team to kind of get in there and figure it out. And it doesn't seem like the data is giving sales teams that much of a chance to really rectify the absence of good marketing. 

The other challenge, and this data comes from Trust Radius, is that customers absolutely hate the way we sell. Top five things that customers dislike: 1) receiving too many emails, 2) cold calls, 3) aggressive sales representatives, 4) uninformed sales pitches, and 5) non personalized communications. 

I get dozens of emails every day from people trying to sell me products that in no way could help me, and I'm a small organization. We can only imagine the sheer volume of messages that a medium or large organization is getting when you think of all channels. Every time any of us has been we've been in a larger org or a small org, it's the same story. 

Now, some of the data about the buyer journey has stayed consistent after COVID. Research from McKinsey notes that 70 percent of B2B decision makers are open to new, fully self serve purchases in amounts greater than $50,000. That's a lot. What's even more striking is 27 percent of those decision makers would actually spend more than half a million dollars.

And 12 percent would do $1 million dollars of new business, something they've never bought before, entirely self serve. I mean, that's incredible. Trust Radius found some similar data in smaller organizations too. Their research shows 77 percent of firms with 1 to 5,000 employees want to self-serve and almost 90 percent of firms with at least 5,000 - 10,000 employees want to self-serve.

So again, buyers really want to make decisions on their own and they are increasingly looking for  - and are empowered to take advantage of - that opportunity when it is presented.  

An adjacent  data point I want to share with you is the long tail of this buyer journey evolution and our inefficient go to market choices. The insight comes from the Jolt Effect. It's a book that came out a couple years ago, and it is built on a significant data set of sales calls collected during COVID. Here's the finding: buyers are plagued by indecision. This research team analyzed 2.5 million sales calls. They found that a majority of deals are being lost to inaction.

What was interesting was they broke inaction down into two things. 44 percent of that number was “preference for the status quo,” and 56 percent was something they called “customer indecision.”  Now, indecision is interesting because there were three drivers of this. First, customers were worried about choosing the wrong option. Second, they were concerned that they hadn't done enough homework. Third, they were afraid that they wouldn't get what they were paying for, meaning they didn't believe the outcome was certain if they actually made a purchase decision. 

This makes so much sense. If we look at the data from earlier in this conversation, it is clear people are just overwhelmed and inundated. In a sea of Me Too products and overly aggressive go to market, it's easier for people to say: I'm just going to sit back and not make a choice here, because the odds of me making the right choice are slim to none.

And so customers are saying to themselves: why would I risk my reputation and the trust of my colleagues and spend my already limited budget on something that's not going to be a winner. It doesn't take much imagination to see where buyers would be coming from. I recommend reading this book to better understand the source material and the amazing dataset the researchers worked with.

The consequence of that indecision is really tremendous because they found in this data that 87 percent of sales conversations showed moderate to high levels of indecision.

If a deal had low levels of indecision, that wasn't that big of a deal. The win rates would still be about 45 to 55%. But once you got into moderate levels of indecision, win rates dropped 25 to 30 percent. And when there were high levels of indecision, 5 percent, less than 5 percent of deals were actually won.

There's a problem there. There's something systemic. Maybe it isn't just the buyer journey, but as I've analyzed all of this data from our meta analysis in  the aggregate it is a strong hypothesis that I hold. The result of all of this, the result of this change in the way that we sell and the indecision that our old processes are driving is that we're not doing ourselves any favors. Sales cycles are longer. Contracts are shorter.  80 percent of B2B companies have buying committees.

No big surprise there. However, I was surprised to learn that there are 22 distinct roles involved in the process now, according to G2 which was more than twice what I had seen in prior data.  Contracts are also much shorter. G2 found that more than half of software contracts are for less than six months. Only 11 percent were more than two years.

That's not great, especially when many of us are in companies that are SaaS, they're subscription products. They're dependent on a renewal. Super dependent on lifetime value. So suddenly, if we have really short contracts and customers are either not committing to the renewal or are agreeing to shorter terms, that's really problematic.

Here's another data point which might concern you, as it did me. Only 45 percent of software buyers renew without rethinking the consideration of the purchase. 53%, more than half of companies --are looking at alternatives when renewal time comes. So again, just because you close the deal is not enough. If the product wasn't good, if your price is wrong, if a competitor has a better offering, like be prepared to fight for that renewal in less than a year .

Don't assume the renewal locked up like it might have been a few years ago or during COVID.  Given the fact that buyers want to do all this work on their own, it's understandable that the importance of the sales team is declining in the eyes of B2B buyers. 68% of B2B buyers only want to involve the vendor's team at the very last stage of the buying process, also from G2.

Again, that doesn't mean that our sales colleagues are doing anything wrong. It is the result of a pretty broken process. And it puts more pressure on sales teams to add value, but also it's really pretty unfair because if you look at this data, I mean, you'd have to have superheroes for salespeople to salvage all of this.

We are living this already. We can see this data in our workplaces in terms of missed targets and frustration and cultural conflict across teams, churn, the executive turnover. There's a long list of examples and of data that would indicate this is not going great for anyone.  

My conclusion from all of this data is: the buyer journey data indicates that people really don't want to be bothered by us until the end of the process. If ever. The solution, in my view, is to let marketing teams help. Let them do the work that  most marketers would actually like to be doing, and that is to sell at scale.

That means rethinking go to market. It means rethinking the kinds of campaigns and content and information that we provide to buyers. Instead of relying on a salesperson to close the deal in the last two seconds of the game, we need to really rethink how we can empower, influence, and educate buyers sooner, and the information that we used to expect a salesperson to deliver in a meeting, or God forbid, five qualifying meetings, which I have been in to my great chagrin.

We need to actually give people information so that buyers can access that information when it makes sense to them and feel like they're actually learning something. It  almost sounds  basic, but I do think that buyers in complex deals have lots of questions. Referencing back to the indecision data, I think the data bears that out.

But there are smart ways that we as revenue professionals, as marketers, as sales leaders, can actually empower those buyers. In one on one conversations, highly competent top salespeople are great at this kind of work. I don't see any reason why marketers wouldn't be able to do the same kind of work at scale.

That, to me, feels like the only solution to this problem.  I think we need to liberate marketing teams and stop asking them to do low cost lead gen. None of that work matters. Buyers don't take it seriously. It's not moving anyone. It's only helpful in the short run, because in the long run, what's happening is you're basically wasting everything that you're giving to marketing.

None of it is really helping you and the business. And so no one is winning. In fact, it's just creating a vicious cycle. I think the solution is a good revenue model. I think we want teams, particularly the marketing team focused on doing the right thing for the business in the short and long run. And I think having a marketing team that's focused on revenue.

Not just pipelines, certainly not influenced anything, but attributable qualified pipeline. And when I say attributable, I mean customer reported attribution. I do not mean direct attribution. The reason I say that is direct attribution drives marketing teams to low cost channels that look great in a blended CAC model, but they do not drive business results.

You're wasting your money if that is all you're letting your marketing team do. I know that some CFOs, CEOs, and maybe investors feel nervous about things they can't touch and feel. But right now, that's the reality of the world we're in. The world has already changed. All of your buyers and the people that they are influenced by are making decisions based on things you can't directly attribute.

Here's how I look at it. Whatever value your sales team adds in the room is exactly what your marketing team should be doing at scale. And that isn't Google Ads and SEO and content syndication. The more considered and thoughtful programs like a podcast or other types of deep content require new metrics for measurement and for efficacy.

I specifically recommend customer research programs. Regular interviews, discussions, and meetings with your customer base. It's market research. It's going beyond the tactics of product discovery and really trying to get deep into customer insights. That is the number one thing you can do. And as a result of that process, you're going to get data and insights and feedback about the marketing and the sales programs.

That's a huge benefit of doing the insights work on a regular basis. You can actually talk to your customers! How did they hear about you in that research? Who else did they consider? What were the deciding factors in their process? And if you do that on the regular basis, hugely beneficial. It's also something that you should put on your website. Ask that first question of customers the moment that they actually agree to talk to you or request a demo. That simple question on your website can be a huge source of insight. 

Every team in the business needs to care equally about the business results. And I'm not saying that people don't care. I mean that we need KPIs and we need to empower teams so that they can really pursue the activities that actually do deliver for the business. 

There are two things for marketing, in particular. First, I believe brand building is misunderstood. Brand building is trust building. It's more than colors and fonts, or at least it should be in your organization. It's more than just a single campaign or a couple pieces of content. It is a long term commitment to educating your customers and building their trust. their trust in you. That's what it is about. And that takes a different focus and long term vision, but it is executable and it is measurable. 

The second thing is performance. Performance is about results. I am not a fan of excessive emphasis on performance marketing because I don't care how many clicks an individual campaign gets or an asset gets. It totally misses the point of what we're trying to do. The performance of individual campaigns or assets or whatever else is helpful directionally to  a marketing organization to know what is and isn't working. But that is absolutely not how we should be measuring anything in terms of value to the customer . And it should certainly not be the measurement that we're sharing across teams and sending over to the CFO because it's not helping anyone.

What we should instead be measuring are things like  pipeline velocity, customer reported attribution I mentioned, and overall metrics around acquisition and retention. That's the way out of this. I don't think there are any short term KPIs that you're using today for lead gen that's going to really work in a world where no one wants to talk to you.

It's a wholesale change in how we look at go to market, but I don't think it's something you can do just in a marketing team. I think it requires reengineering  what the revenue organization looks like. And also rethinking what product is or isn't doing to contribute to some of these challenges, too. Because one of the contributing factors is vast amounts of undifferentiated products. They're slowing everyone down and putting a lot of pressure on sales and marketing. All of our time is better suited to building better products and solving problems that customers actually value and are willing to pay for, if you've had a chance to listen to our episode on monetization. 

I hope all of this is helpful. If you have a chance to go back and look at some of this data, I think it could be really interesting. It certainly has changed my thinking and it has validated some of the concerns that I've had over many years now about the efficacy of the work that we're doing.

Because like many people, I really like my job. I love the work I do. I think it's really interesting. I love the people I get to work with. And it's really frustrating to do work regularly that is not helpful to the business, to any of the goals that I'm trying to achieve. I'm a competitive person, so I care about strategy and goals.

And I really don't like doing work that annoys the customers I'm trying to help. It just feels like a lose / lose and I don't think it has to be that way.  Thanks for listening.