Revenue favors the prepared: How to hit your B2B software target in calendar H2
Marketing precision and flexibility were top growth drivers in the first half of 2024. The second half will highlight the importance of both.
Business to business (B2B) software vendors and partners who outpace the competition will draw from a wide array of intelligence sources and use AI to improve the adaptability of their execution. They’ll weave AI into more of their research, production, and operations to combine previously under-integrated ideas and workflows into powerful systems for connecting with customers. They’ll accomplish big goals faster because their preparation will be more thoroughly in tune with buyer needs.
Today we’ll share the data points and trends that are influencing our B2B marketing and AI thinking in 2024. Key takeaway: The more details you put in, the more happy customers you’ll get out.
We’re in growth mode. But for how long?
When we chat with clients about how to invest their marketing budgets, we start by comparing the trajectory of today’s market with the viability and differentiation of their offers. At a macro level, Gartner’s recent 2024 forecast is for 8% growth in worldwide IT spending, which is expected to reach $5.1 trillion. Catalysts include a 13.9% increase in software spending and a 10.4% increase in IT services, primarily fueled by cloud services and cybersecurity investments. This isn’t a surprise, as we’ve noticed buyer interest in driving operational efficiency and creating secure, scalable environments that will leverage AI, data, applications, and platform solutions to optimize business performance.
A recent Forrester survey of nearly 900 global B2B marketing executives showed increased budgets across multiple categories in 2024. Specifically, 67% of respondents expect an increase in their technology budget, 62% foresee a larger programs budget, and 59% anticipate spending more on personnel. We see AI as a core motivator in each of these categories, from how to deploy and scale AI to the computing and software power needed for AI to generate returns, to the upskilling required for repeatable marketing success.
We expect the growth fundamentals in place during the first half of 2024 will continue through the remainder of the year and into 2025.
Purchase criteria are changing
Each of our clients is intensely focused on generating marketing return on investment (ROI) and uses first- and third-party research and analysis to increase the probability of achieving it. Their buyers are equally attentive. In 2024, as in the past three-plus years, B2B software research often begins with buyer and user reviews.
For B2B software vendors, the importance of reviews can’t be overstated.
According to another recent article from Gartner, 98% of B2B software buyers consider reviews critical for making purchase decisions. Specifically, 92% of buyers trust reviews from the past year, and 66% prioritize reviews verified by third parties for their credibility. If you’re a software vendor with a robust partner ecosystem, the imperative is clear: Ask your partners to continuously source and compile customer reviews. The upside may be the difference between a sale and never being seen.
To offer a practical application of user reviews, we invest a lot of energy helping software vendors and their partners assemble high-impact joint value propositions (JVPs). Essential components of these JVPs are buyer and user reviews that describe current needs, alternative solutions, what’s working, what’s not, and where there’s room for improvement. When messaging and positioning based on real-world insights can be supported by trusted reviews, the resonance of JVPs increases. And where AI can be used to help buyers and sellers find, filter, and clarify those reviews and the insights that accompany them, everyone wins. This is happening at scale today.
Buy cycles require more effort from sales and marketing
A savvy JVP and positive reviews are stepping stones to buyer lists: the long and the short. Or, more accurately in 2024, the short and the shorter.
As noted in G2’s recent buyer behavior report and based on our experience, software vendors need to differentiate early in the buyer's journey because list qualifications are becoming stricter. In 2024, 49% of buyers have had only 1 to 3 products on their shortlists, a significant rise from 33% the previous year. Meanwhile, those considering 4 to 7 products dropped to 31% from 45%. Despite these shorter lists, investment sizes are increasing, with 12% of buyers reporting involvement in purchases over $1 million, up from 9%—Meaning the cost of not being on short lists is going up. And that landing JVPs has never been more critical.
Adding to the need for smart insights interpreted for multiple audiences, G2 points out that decision-making now frequently involves top executives, with 41% of purchases requiring sign-off from C-suite members or the CFO. According to the same report, the CFO holds final decision authority in 79% of cases. As an extra incentive for diligence and accuracy, legal considerations can have a material impact on transaction speed. The same research notes that legal teams are blocking or slowing 61% of potential purchases. Vendors and their partners need to ensure marketing and sales dot every i and cross every t.
A result of buying committee dynamics is extended sales cycles. Also cited by G2, for software purchases exceeding $20,000, 49% of decisions now take four months or longer, up from 41%. Slower deal velocity and higher scrutiny are impacting vendors and their partner marketing programs, highlighting the need for increasingly persuasive engagement strategies.
Based on research and experience, we’ve noticed that brands able to devote more focus than their peers on mid- and lower-funnel activities, on nurturing their leads and being prepared for every conversation not just the initial conversation, put themselves in winning positions. More clients are seeking advice on how to capitalize on holistic, full-journey marketing, and we’re using our decades of experience to offer it. AI is making it easier because AI helps us make more accurate and timely marketing decisions, with faster payoffs and more favorable buying commitments.
Embrace the ecosystem
Partner ecosystems are revenue and growth engines that provide vendors with deep market access. A substantial portion of our business is helping vendors manage their ecosystems and partners make the most of them. In short, when software partners are able to combine their marketing and sales investments, buyers are exposed to solutions tailored to their unique scenarios and realize they don’t need to settle.
Solution directories and websites dedicated to fresh, relevant, partner-driven ideas can help vendors showcase their ecosystem and buyers separate signal from noise. As a vehicle for connecting buyers with the information their committees need as well as transaction opportunities such as marketplaces, directories are being used to help validate claims and increase buyer trust because they acknowledge the control buyers already have. They respect the fact that buyers are short on time and want to work with vendors able to meet them wherever they are in their journey. They also respect that the buyer’s journey moves to its own rhythm and accommodate that rhythm by offering always-on information and offers. As solution directories and buyer websites evolve, we realize AI will be used by buyers seeking to filter for results and are helping vendors architect their information in easy-to-follow, accurate formats.
For additional background on ecosystems in today’s economy, we recommend checking out a recent article by McKinsey. We, too, see a strong correlation between ecosystem strength and revenue upside and have built our agency around it.
As we put ecosystems to work at Knack, we devote time and attention to cloud marketplaces and reducing the complexities between research and purchase (and re-purchase). Much of this work centers on hyperscalers.
According to recent research from Canalys, global sales through hyperscaler marketplaces will reach
$45 billion by 2025. This will represent 84% compound annual growth rate (CAGR) over five years. Much of this growth will be driven by enterprise strategies to utilize committed cloud spending, with key players like AWS, Microsoft Azure, and Google Cloud facilitating these transactions. The research also points out that channel partners will be involved in nearly a third of transactions by 2025. For an agency dedicated to channel partner performance, this is another data point in line with expectations.
A common refrain at Knack is to “begin with the end in mind.” Because transactions and satisfied customers frequently represent the end, we’ll continue devoting our attention to helping vendors make the most of marketplaces: how they’re marketed, the value they deliver, and the vital role they’ll play in achieving growth objectives.
Test and pilot like your business depends on it. It does.
We’re constantly piloting. Piloting marketing engines, creative ideas, media channels, offers ... as much as we can. It’s because we know that piloting leads to insights and insights lead to value and value to happy clients with happy customers.
Recent research from Bain revealed that revenue-leading organizations in B2B software, distinguished by strong growth in sales and web traffic, allocate significantly more resources to digital marketing experimentation compared with less successful companies. They spend about 50% more budget and dedicate 80% more staff hours to this area, and leverage AI to enhance their performance. We’ve noticed this trend at work in the first half of the year and expect it will continue.
The ability to compile data-driven, real-time optimized iterations of lead-generating and converting ideas is a strength of AI. It’s a springboard to marketing innovation and one of our most recommended focus areas. Given the revenue advantages of efficiently connecting research to positioning to messaging to awareness to interest to validation to sales, it needs to be.
Precision matters (and other H2 essentials)
Every touchpoint counts. If even one is less specific, targeted, relevant, or problem-solving to buyers than it might otherwise be, then the risk of lost sales increases dramatically. If this sounds stressful, it is. If it sounds impossible, it isn’t for those who prioritize results first.
The market will continue evolving at increasing speed. New technologies will emerge, buyer and user preferences will shift, media alternatives will change, marketplaces will gain momentum, and insights will become more widely available. This is expected and will be driven in part by AI. For marketers who know how to ask the right questions, source the most relevant research, and package their marketing to maximize impact, this evolution will represent larger opportunities than ever before.
When in doubt, use data to determine if your campaign is precise enough to attract the most astute buyer and counter the toughest critic. If it holds up to the scrutiny of buyer reviews and consists of assets needed to drive engagement and conversion from awareness to closed/won. If it takes advantage of market trends and will excel in partner ecosystems. If it’s tested and proven, guided by AI and built to scale. If so, positive results await.
Knack helps the world’s leading B2B software vendors and their partner ecosystems outperform expectations and drive sustainable revenue. If you’d like help connecting with your target audiences and achieving breakthrough results, then reach out to Knack. We enjoy comparing notes. Until then, may your best results of the year be ahead.