Tag: Economic Trends

Bombora B2B Research Trends

Intent data vendor Bombora analyzed its topical data to gauge economic concerns and how they may play out across B2B research.  While economic growth is up 60%, economic downturn is up 119% year-over-year, and market volatility has spiked 149%. Likewise, layoffs (109%) are far outpacing hiring (42%).

“In general, what we’re seeing is a shift in focus from business growth to business resiliency.  In fact, July 2022 actually marked the first time we’ve seen the volume of searches for resiliency surpass those for growth,” blogged Hsiaolei Miller, Bombora VP Insights & Partner Success.  “So, instead of focusing on advertising and launching new products, B2B businesses have been investing more of their time and energy into understanding how to maintain their current business through retaining their customers, encouraging renewals, and other strategies.”

Business Resilience topics are surging (Source: Bombora Market Insights)

Thus, Brand and Demand is the primary focus of businesses, with searching on customer expansion and RevOps becoming more important.  Last year, growth-oriented topics outpaced more “maintenance-focused” topics.  However, these topics have achieved rough parity.

Moreover, research in Brand and Demand topics has shifted towards inbound efforts and away from outbound marketing.

Inbound Marketing research is growing and outbound is in decline Business Resilience topics are surging
(Source: Bombora Market Insights).

“With cost pressures mounting, businesses need to focus on extracting as much value and engagement possible from the customers in their pipeline vs. going through the process to find net-new customers,” argued Miller.  “Businesses still want new business, but they want to be more efficiently capturing and capitalizing on every lead that comes into the pipeline.  This can be seen in the increased research into retargeting and conversational marketing strategies and the increase in interest in general inbound marketing software.”

Bombora also found increases in research related to customer expansion (upsell, cross-sell) and time to value.

“Customer expansion involves creating more value for your business by selling your existing customers more of your product or service.  Customer TTV is the time it takes until the ‘Aha!  moment’ when a customer realizes the expected value of your product,” stated Miller.  “Businesses are looking to accomplish both of these goals through investments in customer support automation vs. traditional customer support, which aims to maximize efficiency while also lowering overall customer support costs.”

On Salesforce’s earnings call this month, co-CEO Bret Taylor argued that executives are focusing on time to value and digital transformation benefits (e.g., cost savings, customer satisfaction, and top-line growth) when evaluating digital investments.

Ross Graber, Principal Analyst at Forrester, came to a similar conclusion in his 2023 B2B predictions.  “In light of economic uncertainty, B2B organizations will strive to grow in the places they know and the places they understand.  As a result, B2B growth strategies will tilt heavily toward retention, cross-sell, and upsell revenues.  Growing revenues within the existing customer base requires not only great products and services, but strong customer relationships.”

Sales and Operations Planning had the biggest jump in topical research in Q3, up 386% year-over-year.  RevOps looks to align sales, marketing, and customer success across the customer lifecycle.  RevOps looks to address questions such as how do we get and keep customers?

“During times of uncertainty, businesses are less focused on casting wide nets for new customers and taking big risks, and more focused on squeezing the value out of the customers they already have in their pipeline,” stated Miller.

Resources

Sales Rep Turnover

Leveraging its Economic Graph, LinkedIn noted that sales rep turnover is up 39% over the past three months (overall global turnover is up 28%).  Sales is the second most in-demand position globally.

“Companies need to recognize that the power dynamic has changed — workers are going to demand more from them on multiple fronts,” said LinkedIn Chief Economist Karin Kimbrough.  “Candidates are being much more selective about where they work, and workers are more vocal about what they want.”

Replacing sales reps is an expensive proposition, according to a 2015-2016 DePaul University study.  When factoring in the opportunity cost of an open sales seat and the hiring and training expenses, replacing a sales rep costs $115,000.

Further complicating matters, buying team turnover spiked over the past year, up 31% in Q3.  Thus, demand units are more difficult to navigate, and deals are more likely to be delayed due to key decision-maker departures.  According to LinkedIn State of Sales 2021, 80% of sales reps said a deal was delayed or derailed due to buyer role changes over the past year.

Unfortunately, employee burnout rose 9% between April and July, just as employees were readying to return to the office, but Delta delayed such plans.  Over the same period, employee happiness dropped three points.

“This simultaneous dip in employee happiness and spike in burnout is a warning signal: very few people want to return to pre-pandemic work life, said LinkedIn Head of People Science Strategic Development Amy Lavoie.  “Part of the issue here is that the communications around organizations’ return-to-office plans can carry a dangerous subtext.  It may look to employees that, while their leaders had prioritized their well-being and safety in the pandemic’s first stretch, they’re now focusing on business and advancing their own agenda at all costs, leaving employees’ concerns in the wake.”

“Employee well-being is not a fad; it is a fundamental human need,” continued Lavoie.  “It’s not going to take care of itself as businesses start asking employees to return to the office. Employees are looking to their organizations to value their needs as full human beings and trust them to make decisions about how, when, and where they work. Until that happens, we will continue to see this deadlock between employees and organizations on happiness and burnout.” Employee priorities are shifting, with a greater emphasis on flexible work arrangements, inclusive workplaces, and work-life balance than just a few months ago. As a result, work-life balance is ranked as the top priority among job seekers.

Glint (LinkedIn) Employee Well Being Report (Sept 2021)

Flexibility is key.  Three out of five employees feel they are equally productive working from home and that their overall well-being is equal to or better than working in an office.

A Fortune Analytics survey of over 10,000 knowledge workers found that 76% of knowledge workers want flexibility in where they work, and 93% want flexibility in when they work.  Additionally, 57% of knowledge workers are “open to looking for a new job in 2022.”  However, among knowledge workers who are dissatisfied with the level of flexibility, the open to looking rate rises to 71%.

“Just last year, joblessness in the US was at its highest level since the Great Depression,” wrote Fortune Editorial Director Lance Lambert.  “Scrambling to hold onto their jobs, workers started taking on extra responsibilities—something many of them hold onto today even though the economy has shifted into one of its strongest periods in recent memory. That explains why 19% of workers say their work-related stress is ‘poor,’ and another 33% say it’s ‘fair.’”

Fortune Analytics also found that workers with inflexible work schedules are 6.6 times more likely to report work-related stress.

LinkedIn Senior Content Manager Paul Petrone suggested three areas of investment to retain sales talent:

  1. “Career conversations and career development for your employees.
  2. Providing work-life balance, which should ideally include flex work.
  3. Diversity, inclusion, and belonging.”

Workers find it difficult to maintain a work/life balance, with 35% of workers telling GlassDoor that balance isn’t possible in their current role.

“Very few people both see a path forward and feel support for an internal career move,” observed LinkedIn People Science Senior Researcher Eric Knudsen.  “Luckily, there’s a clear solution.  While it’s natural for managers to worry about losing a team member, employees want learning and growth opportunities.  So, whenever someone starts looking for their next opportunity, a lack of manager support could inspire an external move.”

Knudsen recommends that managers frame internal mobility as an opportunity and not a loss as they place an advocate and partner in another part of the organization.  Furthermore, the organization retains talent, and cross-team collaboration is likely to rise. 

“Work-life policies which are rigid or offer little flexibility are proving problematic for UK employees,” said Glassdoor Economist Lauren Thomas.  “Our research has indicated that workers want autonomy over how they juggle their home and work lives and need employers to offer a range of options to support this. There also needs to be trust between the two parties — avoid micromanaging teams who are working from home.”

What’s more, Glint (a LinkedIn subsidiary) found that only one in five employees feel they can meet their career goals in their current organization, increasing the likelihood of departures.

I also recently wrote about The Great Reshuffle.

The Great Reshuffle

According to LinkedIn, “The Great Reshuffle” has increased turnover amongst buyers and sellers, leading to greater deal risk.  Over the past three months, executive departures (Director and above) have increased by 31% globally.  Among sales reps, the rate is up 39%.  Thus, the likelihood of a deal being delayed due to a key member of the demand unit or sales team leaving has grown sharply.

Before the pandemic, the standard decay rate of contact records was between 25 and 30%.  If the rate has jumped by one-third, then the likelihood of a specific member of the buying committee departing over a three-month sales cycle is approaching ten percent.  Thus, a demand unit with six members will likely have one departure every three months, increasing the need for executive change alerts, multithreading of deals, and a deeper understanding of the demand unit.

If the deal is more complex, the odds of delays and stalled deals due to executive changes increase rapidly.  A six-month deal cycle with a dozen members of the demand unit (financial, technical, and functional decision-makers, purchasers, influencers, lawyers, compliance, etc.) could lose two or three members.  And that doesn’t even factor in the risk of churn on the vendor side.  What’s worse, single-threaded sales reps have close to a 20% risk that their champion leaves the company or assumes a different role over the deal lifecycle.

The renewal math becomes scary as well.  If the customer success team regularly interfaces with four individuals on the customer side, one or two of them may depart over the year, increasing churn risk.  Furthermore, a higher churn rate among customers necessitates greater administrative and training tasks.

It shouldn’t be a surprise that 80% of sales reps have had a deal delayed or lost due to departures.

LinkedIn Senior Director of Global Sales James Burnette argued that multithreading is key to managing deal risk.  “Multithreading – i.e., forming relationships with multiple people on the buying committee at an account – is always a best practice.”  Burnette noted that sellers with at least four connections at an account are “16% more likely to close a deal with that company, compared to sellers who have less than four connections.”

“The most beneficial thing you can do right now is to learn how to master multithreading,” JB Sales Training Director Morgan Ingram said. “Gathering champions, influencers, and talking directly to the decision-makers is the key to success when it comes to closing deals faster in a difficult environment.”

Conversely, departures can foster relationships at new accounts, so knowing that a key demand unit member has departed is important for both risk mitigation at current opportunities and accounts and building relationships at new organizations.  LinkedIn can both flag executive departures and maintain an open line of communications with a champion after he or she has settled into a new position.

“Resources are scant with so many people exiting key roles, so there are opportunities where they might not have been opportunities in the past,” Assist You CEO Robert Knop said. “Look through your connections – there are uncovered sales there.”

Lori Wizdo, Principal Analyst at Forrester, predicts that the Great Resignation will also impact marketing teams, with CMOs assembling more virtual teams consisting of freelance talent, fractional executives, and agency partners.

“We’re seeing clients in places like the Midwest having trouble keeping the talent they’ve built because their team members can get 25% more by working remotely for a New York agency. The distance and untethering from our geographies give people a lot more options, and they will minimize their pain and maximize their gain.  So, there will be some stress on those internal competencies.”

Job turnover is likely to continue in the near term. The labor market remains out of balance with 100 open jobs for every 75 unemployed professionals, driving the quit rate to 4.4 million in September, a record high.

“You’re essentially seeing demand continuing to increase without an offsetting increase in talent,” Ryan Sutton, a district director at staffing company Robert Half International. “Until some new talent comes in, until we get employees who are on the sidelines back into the market, it’s very likely this is going to continue.”

Signs of a Market Slowdown

There are a number of indicators signaling a slowdown in both the general economy and technology products and services:

  • The Gartner CMO Spend Survey showed a drop in marketing spend as a percentage of overall spend from 11.2% in 2018 to 10.5% this year.  The peak in marketing spend was in 2016 (12.1%).  The data is based upon a survey of 340 North American and UK marketing leaders.  However, 61% of marketers anticipate a rebound in 2020.  “While we’re not yet witnessing a precipitous drop in budgets, this year’s downtick presents a counterintuitive scenario,” commented Gartner’s VP of the Marketing practice, Ewan McIntyre.  “You could call this confidence in the face of adversity.  Or you could call it hubris.”

    MarTech budgets fell 3% to 26% this year.
  • The Gartner 2Q19 Global Talent Monitor indicated growing concern about the job market with fewer employees looking to change jobs.  53% of US employees are intending to stay put and only 12.5% are actively looking for other positions.  The US actively looking rate dropped in half in Q2 and the percent looking to stay put rose ten points.  “Over the previous several years, the clear story within the U.S. has been a robust economy, tight labor market and plenty of opportunities for growth and improvement from the employee perspective,” said Brian Kropp, chief of research for the Gartner HR practice. “With this quarter-over-quarter increase in intent to stay, we are now seeing a shift as employees hunker down, indicating concerns around available job opportunities and potential weakness in the labor market.”

    Gartner also noted a 2.4% decrease in global business confidence amongst employees and an increasing willingness of US employees to go “above and beyond the call of duty at their jobs.”  According to Kropp, “Workers appear to be putting more time and effort into their current positions with the hopes of solidifying their roles in case of a change in the economy.  This situation creates an opportunity for organizations to invest in internal training programs that capture this employee commitment to build a stronger, more productive workforce.”
  • Trump’s Tariff War is proving more difficult to win than he anticipated, resulting in inflationary pressures in the US alongside harm to the industrial and agricultural sectors.  Tariff rates are expected to increase at the end of the year.
  • Brexit remains a big question mark with dates, agreements, and new UK elections changing almost every day.
  • The US and UK governments are both very unpopular with Trump facing Impeachment hearings and Boris Johnson preparing for an election.
  • While the US unemployment rate is at a historical low point (3.6%), the economy only added 128,000 non-farm jobs last month and 130,000 per month this year, well below the 223,000 jobs added each month in 2018.
  • The preliminary US GDP Q3 growth rate came in at 1.9% compared to 2.9% in 2018.
  • US Hiring has slowed to its lowest rate in seven years.  A survey of economists by the National Association of Business Economists found that only one in five of their firms grew their headcount in Q3 down from one in three in Q2.  Capital equipment purchasing is at a five-year low and fewer firms are offering pay raises.  “The U.S. economy appears to be slowing, and respondents expect still slower growth over the next 12 months,” said Constance Hunter, NABE president and chief economist at KPMG.

    The NABE also reported slowing sales with only 39% reporting sales growth in Q3 compared to 61% a year ago.

If the US economy tips into a recession, there is little room for fiscal or monetary policy to slow a recession.  The Federal Funds rate (1.75% following three cuts this year) is historically low for an economy at 3.6% unemployment and the Federal deficit provides little room for expansionary fiscal policy.  Trump lowered personal and corporate tax rates when the economy was strong instead of waiting for a recession.