This article outlines our latest thinking on how clients buy and the disconnect between where clients spend their time and where firms spend their time.
How does a client actually become a client? I’ve thought about this topic on and off for over 20 years. In school, I studied consumer behavior and service experience design. Over the last few years, I’ve analyzed the data that flows from web properties (both ours and our clients’) and wrote about the findings through an 8-stage buying model. More recently, I’ve watched, listened and read much of Clayton Christensen’s work on “Jobs to be Done.” And, of course, I’ve talked to many of the folks who read this blog about how they sell and how their firms get hired. All this to say, I’ve been looking at models on this topic on-and-off for the better part of my agency career.
What I’ve always found frustrating about decision-making models was that most (including my own) were too complex and not all that helpful in decision-making. A model might explain how people would likely behave, but it was hard to follow. And, it wasn’t all that prescriptive in helping you use that insight to prioritize marketing efforts. Together, this would make the model too difficult to apply in a practical situation. Long story short — I wanted a model that would make it easier for a firm to think about how its various marketing investments and activities fit together to create demand and attract clients. So, early last year I began developing a model designed to do all those things. This work has become the Rattleback Demand Generation Model. The base layer of the model is what I call the Arc of Client Attraction. The arc represents the steps a client takes to become a client. As you’ll see from my previous articles on the buying process, I’ve consolidated it down to four activities a client must take to hire anyone. For the most part, these activities occur sequentially:
- Learning — Researching a big issue or critical business challenge.
- Vetting — Prequalifying potential solution providers.
- Discussing — Exploring their available options.
- Hiring — Negotiating a contract to move forward.
Let’s look at each stage briefly:
#1- Learning
Over the years we’ve talked a lot about the explosion of content and the access to information it’s enabled for business decision-makers. Years ago a client might have entered a business discussion without fully researching the issue at hand, but most good clients simply don’t do that anymore. They might rely on a trusted advisor to bring new issues to them, but more often than not they’re either passively learning about topics through trusted channels (industry/business journals, events) or actively researching solutions to major problems via search or referrals. The learning process inevitably leads them to firms that can help them.
#2 – Vetting
Once they’ve framed an issue in their minds, they begin to assess the potential solution providers that emerged from their learning process. They look for evidence that those firms have formalized solutions to the problem they’ve identified, that they’ve solved it successfully before, and that they have the talent to solve it again. When people talk about “56% of a buyer’s” (or 85%; or whatever number they choose) decision-making being done before they contact you it’s these first two phases of buying that they’re talking about.
#3 – Discussing
By this point in time, the client feels like they have a strong understanding of the issue or opportunity at hand. And, they feel like they’ve identified a small group of potential firms that could help them. This is usually when meaningful conversations begin to happen — directly with potential partners, between senior leaders to establish budgets, and even in clients’ own minds about what has to be done by when. These discussions may be conducted informally (semi-structured dialogues), formally (an RFI), too formally (an RFP), or through a combination of all three.
#4 – Hiring
This is the point in which a client transitions from exploring their options through direct conversation and hiring a selected advisor to move forward. This is when proposals are developed and reviewed, contracts are negotiated, teams are assigned, and schedules are defined.
The Disconnect Between Where Firms and Clients Invest Their Time
Now, the stages themselves aren’t really all that new. Though, I like to think I’ve made it a little simpler than what you might have seen elsewhere. But, you might be thinking to yourself — “gee thanks Einstein.” But, what really matters is the relationship of the stages to the marketing resources you devote to them. In this case, I’m defining resources as time and money which manifest themselves as strategies, capabilities, activities and technologies. Ultimately, that is what the model is designed to explain.
What’s most interesting is that a lot of firms place a preponderance of their marketing resources in the last two phases of the process. They lean heavily on practice leaders and business developers to initiate discussions with clients who’ve largely defined their problems and are actively looking for solutions. And, they invest heavily in marketing support functions to support the development of proposals to pursue those opportunities that appear to pass muster. In a lot of firms (especially architecture and engineering firms) the investment of resources looks like this:
On the surface, this makes sense — the firm is assigning their resources as close to the money as possible. They’re focused near exclusively on clients that clearly have a need and are going to invest resources against that need. Unfortunately, this is typically at odds with where clients invest their time. Most clients will actually spend the preponderance of their resources in the learning and vetting stages:
Clients invest significant time and money to understand the big issues facing their business going forward in an attempt to frame what opportunities exist in the marketplace and what looming obstacles threaten to disrupt what’s working for them now. And, great clients will spend nearly an equal amount of their time vetting potential partners. They’re willing to bear their share of the burden to find the right partners. Only then will they invite a handful of potential partners into formal discussions. By contrast, bad clients will simply toss out an RFP to the universe for your firm to respond. That said, both good and bad clients will spend relatively little time actually reading that competitive proposal your team worked so painstakingly hard to develop.
Too Many Firms Underinvest in the Learning and Vetting Stages
This disconnect means that many firms fall far short of what they could be doing to shape the earliest stages of a client’s buying process:
- Some firms simply aren’t putting enough resources into the development of intellectual capital — they don’t have a thought leadership agenda or a compelling point of view on the issues they solve. They’re under-investing in the first phase of the buying cycle.
- Others are doing the hard work of developing high quality thought leadership. But, they’re not putting enough thought and resources into how they’ll use their thought leadership to progress clients into their next stage of buying. They’re not making it easy for clients to vet them. And, equally important — they’re not doing as much as they could be to make it easier for them to vet potential clients.
And, as I pointed out in my article of a few weeks ago on the need for firms to market to client wants and needs in lieu of solutions, your margin shrinks as clients progress deeper into their buying journey. The more you’re affecting the first stage of the buying process with your thought leadership the better your margin. The more effective you are at graduating clients into and through their vetting process and ultimately into a conversation, the better your margin. So, if you’re really going to get the most out of your investment in thought leadership, then you need to think long and hard about how you move clients through those first two stages. The good news is that much of these first two phases now happens online. So, we can study it and analyze the data underlying it. We can A/B test it. And, ultimately we can systematically improve it.
If marketing more effectively in the first 2 stages of buying is critical for your firm, join us at our annual conference Profiting From Thought Leadership. We discuss a range of issues from how to develop industry leading intellectual capital to how to take your content to market.
