The power of incumbency:
Rethinking your marketing resource allocation
Jodi Lebow, VP Global Demand Center, Hexagon
Robert Hollier, Partner, Momentum ITSMA
The 2024 Momentum Client Buying Index study reveals why investing in your current clients over new logos could be the best path to ABM ROI
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Many marketers still allocate budgets evenly between existing clients and new acquisitions. But our latest Client Buying Index (CBX) findings challenge this 50:50 split. In times of tight budgets and fierce competition, is this really the smartest path to ROI?
In today’s market, enterprise buyers show a marked preference for existing providers. So, potentially one of the biggest mistakes you can make is to over-invest in new logos and under-invest in your key clients.
Our data suggests it’s time to rethink and recalibrate your marketing and ABM strategy.
Existing providers currently have a powerful head start in the buying journey, securing around two-thirds of large enterprise deals. Buyers, driven by caution, appear to favor providers they already know and trust.
This bias toward existing providers is a significant advantage for incumbents, making a strong case for focusing your marketing budget on key accounts. But it’s not something you should take for granted, says Jodi Lebow, VP Global Demand Center at Hexagon. “It’s not a given they’re going to consider you.”
High switching costs and integration/ compatibility issues were the top two barriers to switching providers, cited by well over half of respondents. This could explain why only a minority of clients consider themselves advocates for their current providers.
of buyers say high switching costs were a barrier to switching providers
of buyers say integration/compatibility issues were a barrier to switching providers
of buyers consider themselves advocates for their current providers
CBX reveals decision-making is more challenging, with clients increasingly worried about the risks and repercussions of poor choices. Today, buyers are researching an average of nine vendors, almost triple the number they researched in 2018. Similarly, they’re shortlisting an average of 3.5 vendors, up from 2.1 five years ago.
say the perception of risk due to a potential poor decision has increased as solutions have become more complex and costly
say it’s more difficult to make purchase decisions for complex technology solutions today than it was two years ago
Despite the increased choice and confusion, 71% of respondents said they first identified their winning solution provider before they make their shortlist. Positioning your content and presence at this initial phase is key.
We need to make the journey easier for clients to make sure they’re going to find us early on.
New logos
Existing clients
An even mix of both
Unfortunately, you may win the battle but lose the war: CBX revealed that one-third of buying cycles end up on the road to nowhere.
Rather than be discouraged by this hiatus, organizations should see this as an opportunity to maintain engagement. “It’s not about a flat-out ‘no’, but rather a ‘not yet’,” says Robert.
of companies often put buying decisions on hold after they've started the process
Jodi agrees. “Think about nurturing and staying in front of clients in a light-touch way. Maybe it’s more of a land-and-expand strategy. There was enough of a business need for them to go partway through the buying cycle, so they’re obviously a good fit. We’ve just got to figure out how to leverage that.”
One way to do that is to examine—and overcome—the pitfalls of the buying process.
The buying process is inherently flawed. That’s why clients are increasingly turning to technology like generative AI to help solve major issues. In November 2023, just over a third of respondents were using generative AI in the buying process. Today, that number has skyrocketed to 91%.
We asked buyers what their primary objectives were when using generative AI in the buying process. The results were telling. Half of respondents said they hoped to mitigate risks (e.g. of making a wrong decision), 45% said they wanted to analyze and simplify solution provider information, and 39% said they wanted to accelerate deals.
of buyers use generative AI to mitigate risk in the buying process
While generative AI isn’t making decisions on behalf of buyers just yet, it’s ostensibly becoming a member of the buying team. This has huge implications for providers. “We have to understand the landscape and think about what content we have out there and how that’s being pulled into generative AI and delivered back to our buyers,” says Jodi.
Quicker
Smoother
Simpler
Slower
More complex
Stay the same (it won't have an impact)
In light of the recent changes in the buying process and buyers’ preference for incumbent suppliers, here’s three tips on how to resonate with existing clients…
As an incumbent provider, your client and industry knowledge are a key advantage. Shape your narrative around buyers' pursuit for low-risk investments and capitalize on your existing relationships and results to put you top of mind at the start of the buying journey. “Demonstrate your understanding of the customer’s world and how you are immersed in that world,” says Robert.
Remember buyers' top three deciding factors when purchasing:
Knowledge of my industry
Proven track record
Strength of the brand/reputation
Senior leaders engage with one-third of the thought leadership they come across. To stand out, your content must offer strong analysis and data, which are crucial to the C-suite. Thought leadership is an ideal platform to demonstrate your expertise while showcasing your organization’s most trusted experts to clients. In essence, investing in strong thought leadership is a strategic move to ensure your brand makes it to the shortlist and stands out as a preferred choice.
Quality thought leadership has unquestionable impact:
say it’s important or critical in building trust in solution providers
regularly act if it’s targeted and relevant
Top tip: Read our Thought Leadership Benchmark Report to learn what top organizations do to maximize thought leadership return on investment
Clients leave in search of innovation and new ideas. Product updates and press releases aren't enough: collaborative activities like the executive briefing center (EBC) can bring you closer to clients and show clients what a long-term relationship with you would mean for them. Of the CBX respondents who attended an EBC during their last buying process, nearly three-quarters (72%) said their understanding of the latest trends and developments improved.
“It's important to elevate the conversation from pure functionality and show your vision of how your partnership adds value,” says Jodi.
would consider new providers because they want new and innovative ideas
say executive briefing centers improved their understanding of the latest trends and developments
Contact us to schedule an insight session tailored to your organization or request the full CBX dataset
