What's the biggest mistake you can make with your marketing program?
There's almost certainly a long list of pitfalls and missteps, especially when it comes to marketing to your major accounts. The principles are easy to grasp but much harder to put into practice.
My argument here is that potentially one of the most significant mistakes is to over-invest in net new prospects and under-invest in existing clients. To support the argument, I’ll draw on data-points from Momentum ITSMA’s Global Account-Based Marketing Benchmark (ABX) and Client Buying Index (CBX) surveys. The key takeaway is that you can potentially leverage your status as an incumbent provider to drive growth in new areas. This is the time for land and expand strategies.
Let’s start with what marketing leaders are actually doing. Our annual ABX survey reveals that budgets are split fairly evenly between existing clients and prospects, with even a light leaning towards new accounts.
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gave selling to new accounts a top priority rating
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gave growing business with existing accounts a top priority rating
This looks like a sensible and defensible strategy. If you’re under pressure to use marketing levers to drive growth, surely it makes sense to chase after the new?
I’d argue this isn’t a smart way to allocate your budget. Right now, in 2024, we’re in a period when large enterprise accounts are behaving cautiously. There are multiple reasons for this caution (for example, the uncertainty induced by geo-political tensions), but I don’t want to investigate these in detail.
Instead, I want to highlight one important consequence of this caution and uncertainty – enterprise buyers are showing a marked preference for providers that they already know and do business with. This preference brings with it new opportunity, as we will see.
CBX allows us to examine the historical trend here, and it’s very clear that the preference for a known provider has been steadily increasing in the last few years.
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in 2022
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in 2023
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in 2024
To put this bluntly, it means that right now two in three large deals will land in the lap of an existing provider.
Front row on the grid
With that caution, as I’ve said, comes a potentially massive upside. Enterprises prefer to work with someone they know and trust, so they are much more likely to give an existing provider the inside track on new opportunities – and to do so at a very early stage.
Given that CBX also tells us that the majority of buying decisions are taken before the short-listing stage, this gives an existing provider a powerful head-start.
Safety-first tactics appear to be the norm, another factor that plays into the hands of incumbent providers. We can see this, for example, in the way the Global 2000 organizations are deploying generative AI tooling. Asked to identify the outcomes they hope to achieve, 50% of the organizations we spoke to told us that a primary objective was to mitigate the risk of making the wrong buying decision.
As a matter of interest, the second-ranked outcome that 45% cited was to analyze and simplify solution provider information. That ties into a consistent finding in recent CBX surveys that enterprise buyers view the overwhelming quantity of provider information as a barrier to their decision-making capabilities.
What’s striking in our analysis are the reasons why enterprises often decide to stick with an existing provider. To be brutally honest, this is often driven by fear of the unknown as much as it is by loyalty to a current provider.
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say high switching costs are a significant barrier to switching providers
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say integration /compatibility issues are a barrier
So it’s not the case that enterprise buyers necessarily have a deep level of trust in their set of existing providers. For example, when we asked if enterprises had access to all the capabilities they need via their incumbent, only 14% agreed with this proposition. CBX data-points like this suggest enterprises might be in a “better the devil you know” mind-set.
The power of familiarity
Back to my opening contention. We’re in a world where enterprise buyers show such a marked preference for an existing provider. Why, in such a world, would you split your budget differently and spend more on new prospects? Does it not make more sense to focus on those pockets of potential growth inside your installed base?
My key takeaway is that the Global 2000 in 2024 wants to operate in an environment that is as risk-free as possible. That’s driving the usage of generative AI, as we’ve seen. It’s also driving a preference for known and familiar brands. In spring 2024, we asked senior decision-makers across the globe: when you and your organization were making the final decision for your most recent purchase, what were the top three deciding factors? These are thee top answers that we got back:
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strength of brand/reputation
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proven track record
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knowledge of my industry
These read like a conservative set of decision-making criteria. I’d suggest five principles inspired by this and other data-points:
- Focus more of your budget on your existing client base, rather than chasing leads from prospects
- Keep your brand visible and don’t spend all your money on 'buy now' tactical campaigns
- Don’t be complacent. Many enterprises stay with an existing provider through inertia and even fear, rather than for positive reasons. Find and amplify the positive reasons to stay with you
- Knowledge of the client and their industry ought to be an ace in your hand
- Don’t forget to share your best case studies, even if they’re from different industries
There are a few points to add. Will the pendulum at some point swing back so enterprises grow more open to working with new providers? The answer is yes, although the timing is unclear. It’s a trend we will continue to track closely in our CBX surveys.
Finally, another (great) question is – so what do we do if we don’t have a large installed base of enterprise clients? To some degree, you are swimming against the tide but do not despair! CBX is especially powerful here in terms of outlining effective strategies. If you’re in this position, you’ve already hopefully glimpsed a few reasons for optimism – for example, the insight that enterprises often stay with an existing provider because of fear, uncertainty, and doubt.
I dig deeper into these findings in our latest webinar – 'Stand by me: Why it pays to invest in current clients over new logos' – alongside Jodi Lebow, VP, Global Demand Center at Hexagon, and Editorial Lead at Momentum ITSMA, Hannah Gresty.
You can watch the webinar on demand here. To explore the CBX insights further, read 'The power of incumbency: Rethinking your ABM budget allocation' report here.
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