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Why Branding Matters in B2B Marketing

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Strewn around my house are pens, coffee cups, calculators, USB memory sticks, and assorted swag from various companies I’ve met over the years. What is the purpose of all this stuff? Does having a leather portfolio with a vendor’s logo on it make me more likely to buy their products?

Proponents of swag will argue that it builds brand by getting the business’s name in the office of potential influencers and purchasers, where it will stay top of mind. Is this really effective? Put more broadly, does branding even matter at B2B companies? Or is branding a waste of time and budget compared to "hard ROI" activities that can be proven to drive revenue?

In this post, Part One of an occasional series on B2B Branding, I’ll explain why I think branding is important to B2B companies, and why it should be part of your overall B2B marketing strategy. In Part Two, I’ll discuss the subtle differences between brand and reputation. And in Part Three, I’ll give tips for how B2B marketers should think about building their brands and measuring their results. (And guess what? Giving out swag is not one of the tips.)

Some May Disagree

Some experts argue that branding plays no role in B2B marketing. Their arguments typically include:

  • B2B buyers are rational decision makers (or a committee of rational decision makers) who are not swayed by emotional factors such as brands.
  • B2B purchases are all about the relationship between the individual sales rep and the buyer; if the B2B brand means anything, it is created by the sales rep.
  • B2B products do not promise to make you "cool" or "sexy" or any other aspirational attribute. Price is the only thing that matters.
  • B2B products are too complex to reduce to a tagline or ad.
  • B2B companies sell to narrow audiences, so advertising to create a brand does not make sense.

Even one of the most respected thinkers in business marketing, Geoffrey Moore, recently wrote that branding has no relevance to complex B2B companies, arguing that:

…while [branding] has extraordinary relevance to B2C volume operations enterprises, it has virtually no relevance to B2B complex systems enterprises… IBM, GE, Cisco, Oracle, SAP, Siemens, Accenture, and Caterpillar are great companies, but it is highly misleading to think of them as great brands… In a complex systems enterprise the mechanisms are completely different. Customer intimacy is achieved by face-to-face interactions between representatives of both companies, and buying decisions are made and reviewed by an array of people. By virtue of these differences the impact of brand is dramatically muted…. In reality it is far better to think of such a brand as a placeholder for a strong corporate reputation and leave it at that.

Business Buyers Have Emotions Too

Despite those arguments, my belief is that branding does matter to B2B marketers, and for one main reason: B2B buyers are still people, and people are emotional. And, as research increasingly indicates, emotions impact economic decision making. In Blink: The Power of Thinking Without Thinking, Malcolm Gladwell writes that buyers make most decisions by relying on their two-second first impressions based on stored memories, images and feelings.

Heuristics

More generally, research shows that emotions impact how decisions are framed and are heavily involved in the creation of heuristics. A heuristic is a simple, efficient shorthand that simplifies decision making. They can guide which information and options are considered and which are rejected, and can bypass rational decision making altogether. (Another interesting bit of research found that buyers who had fewer options and considered fewer criteria were more satisfied with their purchase than those with a more complete decision process.) Often, heuristics are useful: if you find yourself in Africa threatened by a lion, you don’t have time to evaluate all your options rationally. But heuristics also bypass rational decision making, which is the source of many biases.

Kevin Randall of Movéo Integrated Branding writes that B2B buyers are overwhelmed with choices, features, benefits, information, data, and metrics. The typical RFP process involves dozens of potential vendors and hundreds of questions – more information than any buyer could evaluate. The fact that B2B buyers have emotions means that no matter how disciplined a buying process is, they will still use heuristics to simplify their decision making. This may be conscious, since the buyer knows she can’t learn everything about every potential vendor, or it may be subconscious. In fact, whether or not the buyer realizes it, the decision is often made long before the buying process is completed. When this happens, even subconsciously, much of the buying process ends up being an effort to justify the initial emotional decision.

B2B marketers can and should tap into this by appealing to the emotional side of their prospects, as well as their rational side. This is where branding comes in, because brands inherently operate on an emotional level by stimulating the amygdala portion of the brain (part of the reptilian limbic system). By building the right brand associations in your prospects mind, you can help to "close the deal" before the selling even starts.

Avoidance of Negative Emotions

Research also shows that emotions impact decision making because we take the anticipation of emotions into our decision making. When looking to buy something, we balance the pleasure of the prospective possession with the pain of acquiring it. When negotiating with others, our desire to avoid guilt, disappointment, and regret can impact our strategies as much as our desire to get a good outcome.

In B2C marketing, marketers often capitalize on the anticipation of positive emotion by appealing to aspirational feelings such as desire. In contrast, the strongest B2B brands capitalize on the avoidance of negative emotions. This is because there is an asymmetry between the upside and downside of B2B purchases: the buyer does not experience the full benefit of the solution directly and may or not be rewarded for making a good purchase, but a bad purchase can destroy the buyer’s reputation and damage job security.

B2B brands can tap into this by building trust in the buyer’s mind. The classic example is "nobody ever got fired for buying IBM". One way to achieve trust is by being a dominant leader in your category. Since that is not an option for most companies (yet), the best way to build a brand of trust is to become a trusted advisor via thought leadership early in the buying cycle. (Stay tuned for Part Three for more on this topic.)

Hard ROI Benefits of Building Brands

Because brand-influenced heuristics impact buyer decision making, companies with strong brands often have better financial performance. The heuristics used by potential buyers lead to greater access, lower price sensitivity, better openness, and more forgiveness for mistakes for well-branded companies. The book Business Market Management: Understanding, Creating, and Delivering Value argues that strong brands are reflected in these preferential actions:

  • Greater willingness to try a product or service
  • Less time needed to close the sale of an offering
  • Greater likelihood that the product or service is purchased
  • Willingness to award a larger share of purchase requirement
  • Willingness to pay a price premium
  • Less sensitive in regard to price increases
  • Less inducement to try a competitive offering

Of course, it can be notoriously difficult for a metrics-driven CMO to prove these effects to their fellow executives, especially since there is no easy "control group" to test against. One approach is to measure brand perceptions from target customers, and then correlate their a priori perceptions to business outcomes. If you can demonstrate a positive relationship between initial brand perception and eventual revenue from that customer, you will be well on your way to being able to proving the ROI on brand building.

For more, stay tuned for Parts Two and Three of my B2B Branding series, in which I’ll discuss the differences between brand and reputation, and share ideas for how B2B marketers can build their brands and measure the results.

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Why Branding Matters in B2B Marketing
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About Jon Miller
Jon has over 11 years of experience helping marketers with innovative technology solutions. He is current VP Marketing and co-founder of Marketo, a provider of easy to use on-demand marketing automation solutions that help B2B marketers drive and track revenue. Before co-founding Marketo, Jon was a vice president at Epiphany, where since 1999 he led overall product strategy and direction for Epiphany's industry leading marketing automation applications. He has also worked as a CRM strategist at Exchange Partners and as a strategic consultant for Gemini Consulting. Jon graduated Magna Cum Laude in Physics from Harvard College and has an MBA from Stanford Graduate School of Business. WebProNews Writer
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