The good news for B2B software vendors is that buyers are buying again. But there’s more to the story.
As the economy has moved from booming to rapid shutdown to gradual re-opening, business marketers and technology buyers have gone through phases, much like the classic stages of grief.
Late March represented the first phase, denial. At this stage, according to research from B2B Marketing Zone and Webbiquity, roughly two-thirds of marketers expected only a relatively short-term impact from the coronavirus-caused shutdown. Most thought live events such as trade shows and customer conferences would return by mid-summer.
That’s not going to happen.
In the second phase, panic, buyers put the brakes on purchasing and marketers put the brakes on spending. More than 40% of buyers said they had “stopped making large purchases.”
And as noted here, “In late March, just 28% (of B2B marketers) expected their overall marketing budget to decline this year by 20% or more. By 30 days later, that figure jumped to 70%.”
Recent signs indicate we’re now entering a third stage, resolve. Marketers and buyers alike have accepted that COVID-19 is going to be around for a while. But the economy is gradually, carefully being re-opened, and life (and business) have to go on.
It helps that we now know a lot more about the disease, such as that it’s rarely fatal in younger people. Less than 7% of all deaths are people under 55 years old, and even those 55-64 years old are six times less likely to be killed by the coronavirus than people 65 or older.
We’ve also learned it does not spread easily by contact with surfaces, or outdoors. And that washing your hands, wearing a mask, and maintaining social distance really help reduce the spread.
The good news for B2B marketers comes from the latest TrustRadius research. In the company’s most recent study, 60% of business buyers now say they plan to spend the same (as forecasted) or more on software this year, up strongly from 45% in April.
Among other key findings from the study:
- Buyers in the education sector are most likely to say they plan to spend more than originally forecasted this year–not surprising, given the need to rapidly expand and improve their delivery of online courses. Spending is also relatively strong in financial services and IT.
- Not surprisingly, small businesses are more likely than larger ones to say their long-term business stability is “greatly” or “somewhat” threatened by COVID-19. The good news, such as it is, is that companies with 50-500 employees are no more likely to say their stability is “greatly threatened” than are the largest firms, and it’s single-digit percentages in both cases.
- Buyers in companies of all sizes say their software selection decisions are becoming more collaborative, ranging from 21% in businesses with less than 10 employees to 32% in companies with 51-200 workers and 42% in very large enterprises. Only about 1 in 10 firms say their buying process is getting less collaborative.
“Throughout this period of massive uncertainty, even as executives made budget cuts and pivoted operations, technology purchasing decisions were still being made by committee for the most part,” says Megan Headley, VP of Research at TrustRadius. “In fact, many respondents reported having more collaborative buying experiences during COVID-19 than they had before the pandemic.
“As companies start strategizing around how to support a remote-first workforce long-term, we’re seeing plans to invest more in videoconferencing technology, remote learning/training, security, and virtual workspaces, for example. The buying dynamics behind those future purchases may be increasingly collaborative.”
Eventually the economy will enter a fourth phase, resurgence. Exactly when this will occur, enabling us to transition to a “new normal,” depends upon the speed of advancement in therapeutics and approval of one or more vaccines.
In late April, 51% of B2B marketers in one survey said they “believe conditions in business and society will begin to approach normal within three to nine months, or sometime between early August and late January. One out of five expect a return to relatively normal times will take more than a year.”
For everyone’s sake, let’s hope the most optimistic B2B marketers are proven right.