1.
WORKING DRAFT
Last Modified 8/12/2013 11:48 AM Eastern Standard Time
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Social: An essential component
of pervasive B2B marketing
ITSMA Marketing Leadership Forum
May 29, 2013
Any use of this material without specific permission of McKinsey & Company is strictly prohibited

2.
McKinsey & Company |
Four forces at work changing the nature of marketing
The primacy of customer
experience and engagement
Digital darwinism
Continued proliferation
of touchpoints
Explosion of data
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3.
McKinsey & Company | 2
Virgin Airways CEO
Steve Ridgway
After all, we fly exactly the same planes as
everybody else. We fly them under the same
very strict safety rules. Yet if you go on one of
our planes and experience the service, you’ll
see it’s very different from many others.
If we get our customers off the plane happy, and
they go on to talk about that and get others to
come and then come back again themselves—
that’s a huge marketing tool for us.
The rise of customer experience and engagement
SOURCE: McKinsey Quarterly, July 2011, ―How we see it: Three senior executives on the future of marketing‖

4.
McKinsey & Company |
American Express CMO
John Hayes
I haven’t met anybody—and I talk to a lot of
my colleagues in the marketing world—who
feels they have the organization completely
aligned with where this revolution’s going,
because it’s happening so fast and so
dramatically. Marketing is touching so many
more parts of the company now. It touches on
service; it touches on product development.
We need to organize in a way that starts to
break down the traditional silos in the business
The proliferation of touchpoints
3
SOURCE: McKinsey Quarterly, July 2011, ―How we see it: Three senior executives on the future of marketing‖

5.
McKinsey & Company |
Chief Research Scientist, Yahoo
Duncan Watts
New datastreams, analytics and decision-making
Marketing has long been data driven, with a lot of
survey research and polling. But the volume and
variety of data that we are beginning to acquire is
vastly increasing, requiring better computing
facilities…and a whole new science.
The marketing world is about to experience a shock.
We tell ourselves plausible stories about how
consumers are going to behave but when you actually
get the data, they don’t do that.
Once you accept that your intuition about how people
behave is inherently flawed, then you really need a
different model for learning about the world. Everything
becomes data driven in a real-time, reactive way.
4
SOURCE: McKinsey Quarterly, July 2011, ―How we see it: Three senior executives on the future of marketing‖

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McKinsey & Company |
Digital Darwinism
61% of consumers use digital channels
43
39
17
1
Buy online and learn
about brands/ products
mostly online
Purchase via FtF and mail but use digital
channels to learn about and evaluate brands
Use all channels to be
aware of products and
buy online
60
41
43
55
74
84
Average
Microblogging
Wikis
Blogs
Video
Social networks
36
23
25
38
41
51
Users
Dec 20101
Companies,
Nov 20112
Percent
And they bring their habits to work
Consumer vs. company Web 2.0 usage
penetration, Europe
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McKinsey & Company |
Digital darwinism: Digital and social drive impact across
the B2B Customer Decision Journey
SOURCE: McKinsey, Customer Survey 2012, interviews, press reports and web research
Online has become the 2nd
most important source of
information for B2B customers
Digital / social enables more
efficient and effective
aftersales services, e.g.,
at Intuit 80% of all customer
questions are answered in
the online community
Low channel costs
revolutionize GTM
approaches, through effective
backbone tools that enable
sales organizations to interact
digitally
New digital sales
tools offering new
opportunities (e.g.,
innovative sourcing
solutions such as
online auctions)
35% of B2B pre-purchase
activities are digital / social
Trigger
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8.
McKinsey & Company |
Digital darwinism: Over a third of B2B customers prefer
digital over traditional channels for purchases
Usage preferences of purchasers along the decision process, Percent
First purchase (Buy)
1 Split excluding all customers who did not use after-sales and/or did no re-purchase
70
30
60
40
SOURCE: Customer survey 2012: 968 respondents across various industries from the US, UK and Germany
Pre-purchase (Identify,
research, consider & evaluate)
65
35
Post-purchase1
(Use & service)
37
63
Re-purchase1 (Buy)
Traditional
Digital
Trigger
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McKinsey & Company | 8
Marketing must be pervasive
▪ We’re living in an era of engagement
▪ Marketing is no longer separable from the
product, the experience at every touchpoint,
all employees and the company overall
▪ Touchpoints critical to engagement exist in
multiple functions and units, but marketing
often lacks permission to access them
▪ Many datastreams critical to insight
lie outside marketing
…we’re ALL marketers now

10.
McKinsey & Company |
Mastering value chain complexity – influencers, procurement, payments
variations, distribution & channel partners, industry verticals, end users
…And fit into the B2B “value chain”…
Strong linkage to sales/the field – B2B marketers impact has to ―come to
life‖ through sales. ―Partnership‖, not ―handoffs‖. ―Translation of customer
insights into usable tools & tactics‖, not theoretical ideas
Maximizing marketing investment – often spreading small marketing
spend across hundreds of products and no ―mega-brands‖
Process is king to fit into ―engineering‖ DNA of many B2B companies
Economic value propositions critical – must understand how customers
make money and how offerings improve that
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McKinsey & Company |
…With heightened agility to shape the Customer Decision Journey
Align investment Gather and activate
data and content
Expand the
surface area Distinguish via
personal value
Trigger
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McKinsey & Company |
Social media embodies pervasive marketing …
SOURCE: McKinsey Digital Marketing Practice; expert interviews
Research
(RFP) Buy
Use and
Service
Loyalty
repurchase
Identify
CustomerCDJstage
Marketer action
Monitor Interrupt LeadAmplify
Consider
and Evaluate
Brand
monitoring
1
Customer
service
3
Brand/content
awareness
Product
launches
7
8
Crisis &
opportunity mgmt
2
Referrals and
recommendations
Brand advocacy
5
4
Foster
communities
6
11
Targeted deals
and offers
9
Solicit customer
input
10

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McKinsey & Company |
Digital and Social can be leveraged at each step
of the B2B Customer Decision Journey
SOURCE: McKinsey
Trigger
Track customer dialogues through a social media
listening center
Build a comprehensive knowledge database by
leveraging online communities
Refine client
segmentation
by leveraging
Big Data
Engage clients through interactive
video marketing
Approach, inform and engage clients
through targeted webinars
Ensure sales force effectiveness by
equipping your sales force with
tablets and digital catalogues
Tailor your offering to the needs
of each client, while providing
access to a vast product portfolio
Strengthen your distribution network through a partner
certification program with tailored online support
features
Capture low-end of market through no-frills, web-
based sales channel
Improve market forecast quality through online
interactive prediction sessions with clients
Have clients service other clients via a customer
service community forum
Gather client input for new product development
through an online feedback channel
Collaborate with users by releasing software to the
open source community
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14.
McKinsey & Company |
From … … to
Communications
Operations
Design
Build
Operate
Renew
Touchpoint ownership split among
functions
Allocation of roles and decision rights
for customer engagement
But there are challenges: marketing is everywhere
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15.
McKinsey & Company |
Expectations are high for social media, but many are dissatisfied with
current performance and measurement
1 Share of respondents with answers 4 (agree) and 5 (strongly agree) on a scale from 1 - 5
SOURCE: McKinsey Social Media Survey among ~ 200 companies
Share of companies1 …
Percent, n = 194
Companies are yet to fully achieve
their expectations with social media …
… that are realizing
significant P&L effects
… that see significant
future upside potential
21
… that are satisfied
with their performance
71
9
… because they struggle with
measurement of impact and ROI
… that measure the ROI
of their social media
activities
… that have KPIs for their
social media activities
… that cannot measure
the effect of social media
60
37
20
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16.
McKinsey & Company |
Social media can generate significant impact at
lower cost than TV… but is it maxing out?
TV
Response curves for incremental sales
Investment
Incremental sales
Tons
Facebook fan page (owned viral social media)
Online display
Facebook advertising (paid social media)
EXAMPLE
SOURCE: McKinsey analysis 15

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McKinsey & Company | 16
Five Years From Now, CMOs Will Spend More on IT Than CIOs Do
SOURCE: Gartner research
▪ 2011 B2B and B2C marketing budgets as a percentage of
revenue were almost 3x (10%) IT budgets (3.6%)
According to Gartner’s research:
▪ On average, nearly 30% of named marketing-related
technology and services is bought by marketing already.
What’s more, marketing now influences almost half of all
purchases
▪ 2012 IT budgets are expected to grow 4.7%, while all
marketing budgets, in general, are predicted to grow 9%,
and high tech marketing budgets, more specifically, are
expected to increase 11%

18.
McKinsey & Company |
Social requires to build a set of capabilities to stay ahead
Topics Description
6 Security ▪ Technical and procedural capabilities to respond to the
increasing security leaks
1 Social
talent
▪ Talent to master the digital journey (e.g. analytical skills,
digital marketing…) and adequate setting to make it excel
New
mindset
3
▪ New mindsets and behaviors needed to compete with
new players and different ways to manage current and
new digital channels
5 Metrics
▪ Set of metrics to enable target setting and monitor:
– The social / digital journey
– Digital performance
4 Innovation at
the DNA
▪ Integrated approach to achieve that innovation is at the
DNA of the company
2 Open
business
▪ All types of partnerships (e.g. M&A, joint-ventures,…) to
acquire the flexibility and capabilities to gain
competitive advantage in the ―digital ecosystem‖
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McKinsey & Company | 18
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