I think I must have had my head under a rock as I hadn’t heard that B2B acquisition costs had gone up until recently, and I certainly hadn’t noticed that much – yet I work in B2B acquisition and live and die by cost-per-lead campaigns.
For a recent new business proposal, I came across this statement and I was, like, ‘really?’.
So I did a search and as far back as 2014, and found research from HubSpot that supported the claim. The research supported the need for:
- more automation
- better marketing
- and of course, an inbound approach
But, I did find quite a lot of content on the subject and it made me wonder, whether B2B acquisition costs have really gone up.
Let’s take a step back
2020 was the year of doom for many B2B businesses. The challenges of Covid-19, lack of events and remote working put most people in a spin. And I’ll be the first to admit that it was a challenging year for digital advertising, forcing businesses to adapt strategy overnight.
But did the costs go up overall? I don’t think they did, and I certainly don’t think that they’ve stayed that way.
We’ve seen peaks and troughs throughout the year. Q2 2020 was good for cost-per-lead. Q4 was terrible – and it appeared that way for everyone as the platforms saw shooting competition as event spend was ploughed into digital and therefore shooting costs. But it soon normalised again in Q1 of this year (2021).
But B2B acquisition costs aren’t just about the cost-per-lead. It’s the all-round cost of acquisition to create a new customer – so it’s hard to know the true cost when you factor in media, salesperson costs, technology and so on. This varies from business to business, and so is difficult to pin down, especially as an agency when you don’t get to see the full picture.
What we can see is the media costs and the cost to acquire a new prospect in the database, or the cost to take that person to a sales qualified lead – and that varies again wildly from client to client, depending on their levels of sophistication, capability, technology and scale.
We’re finding that the way buyers are buying is changing and that requires you to be in more places, more of the time, in ways that vendors haven’t been before.
Recently, we’ve done some research into IT audiences globally and there were some interesting findings that would directly impact the cost of acquisition.
Before I wow you with the stats, the data came from GWI, global IT audiences of IT decision-makers working in companies with more than 500 employees. The data was compiled in March 2021.
Desire to have privacy online
- Use of private browsing and lack of cookies
High propensity to use a private browsing window, delete cookies and use an ad-blocker. The figures for each of these was over 50% of the audience.
Not only does this make digital marketing challenging, this will have a direct impact on the cost of advertising. We know that it’s typically cheaper to retarget website visitors than find new audiences, so if half of our audiences are wiping cookies then it’s challenging from an ad serving and tracking point of view. (No wonder Google is moving away from cookies).
From an ad perspective, this means we’re paying full price all the time and not only that, we’re not able to be smart with sequential messaging based on previous visit or exposure to an ad.
- Ad blockers
If we can’t reach our audience through ads, then we have to be much smarter with other tactics. Third party credibility, review and advocacy are critical here… which means we have to be super-nice to our customers to get their valuable feedback. This goes hugely against the grain with big tech companies who place 95% of their marketing effort on acquisition. Times need to change.
For those not using ad blockers, it means there’s more competition for their eyeballs… higher competition = high costs.
- Ad blockers (#2)
When you delve further, the reasons they like to use ad blockers is really interesting. Whilst not directly related to the increase in B2B acquisition costs, these are subtle ways that change your strategy which are more difficult to measure. Therefore traditional digital advertising costs would go up.
Expansion of the buying group
For a long time, when selling technology, you were selling to an IT person. Not anymore. And what’s more, the buying group has proliferated. Not just in terms of communicating with the different people with the buying group; the diversity of the group has changed.
For example, the IT buyer is often not the driver of the technology purchase anymore, in fact, the end user is often the person driving the change – and these people are often not a regular or frequent technology buyer.
Not only that, but the way decisions are made have changed too. Whilst once buying groups were guided by their purchasing needs, the selling vendor and possibly an external consultant; today, there is far more information available and accessible to support the decision-making process – and much of the information is digital. This means, where once a vendor had control over the buying process in a linear way, that is no longer the case. Instead, the process is no longer linear and instead more like spaghetti soup.
Gartner did a great job of showcasing this a couple of years ago – showing that buyers enter anywhere along their journey. So when you think you have some at a late-ish stage, be ready to have to educate them as though they were completely new to the brand…
So, the impact… more complex selling and more pervasive need to be everywhere. ‘More’ means ‘more cost’.
Influential sources impact too
At the beginning of this blog, I alluded to the fact that influence was changing behaviour too. And going back to the GWI data, this is clear. The top five influencing information sources when researching or considering a new product or service for their company are:
- Recommendations from colleagues/friend = 39.7%
- Recommendations from experts in my network = 39.6%
- Recommendations from industry analysts = 39.1%
- User reviews = 38.1%
- Provider/supplier calls, demos or trials = 37%
It’s worth saying that the US scored more highly on all of these than the global norm, so it’s even more important when selling to the US.
Websites and search results saw 6th and 8th respectively, and then online ads came 12th.
What’s clear here is that if we put as much effort into referrals, advocacy and reviews as we do into digital advertising, then we could probably bring our overall costs down.
That said, there are more and more ways to take reviews and credibility focussed pieces to our intended audiences… but this is only part of the picture, and if you push those out through digital advertising then it contributes to the cost-per-lead cost. But surely, if they’re so well received, then it would bring down the cost-per-lead.
Interestingly, I don’t think many people are measuring that tactic… they’re still focussed on pushing content marketing out into an over-crowded market where the cost-per-lead is high. So it seems that the cost-per-lead is going up.
If we’re smart about how we interact with our audiences, the overall cost-per-acquisition can come down… but we’d need to step away from the fancy technology we’re shackled to that encourages us to push out content marketing all the time on platforms where the price to play is ever-increasing.
Maybe it’s time to re-evaluate the way we do things, rethink how we measure ourselves and consider alternative channels to drive acquisition more effectively.