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One common misconception in business-to-business markets is that a great product guarantees success. While it’s true that an exceptional product, technology or customer experience can rapidly build your brand in the market’s consciousness, it doesn’t necessarily guarantee it.
The real game-changer? The brand behind your product.
Recent studies, including the Liquid x Avasta Challenger Index, confirm this: B2B technology companies need a robust brand to drive profitable growth. In fact, when B2B executives and board members recognize that brand is not only a logo, but rather a shorthand used by current and prospective customers to be comfortable with your products, the growth possibilities are virtually endless.
Yet many executives are still trapped in a cycle of cutting marketing budgets based on short-term outlook or past performance, not realizing that it’s this future potential that fuels growth. Based on our study, it’s clear that many executives are not considering why, when and how the categories are bought by the B2B end customer.
Introducing the Liquid x Avasta Challenger Index
In a marketplace where the lifespans of public companies have shrunk from about 60 years in the 1950s to under 20 today, the strategies for building sustainable business models have fundamentally changed. So have the rules. Until the early 1990s, you had to be historically profitable to even become a public company.
This Index—created in collaboration between Liquid Agency, a brand consulting and activation company, and Avasta, a company focused on measuring drivers of profitable growth—illustrates this sea change in the power that customers have in shaping business category leaders for the next decade. This lens is applicable to B2B products and services, as well as business-to-consumer products and services, with each category examined quarterly. The focus of this article is on B2B products, paving the way for a broader, in-depth analysis across sectors.
In essence, the Liquid x Avasta Challenger Index integrates diverse market segments and provides executives with a comprehensive view of their brand’s standing and potential. It is meant to be a neutral, outside-in assessment of how the end-buyer, decision-maker and/or power user perceives the respective product or service category landscape. To put it another way, the Index poses a set of existential questions: What makes a brand? What makes a company? Can we more empirically understand business strategy through the lens of brand as a competitive advantage?
Our inaugural study focused on six B2B product categories—Business Intelligence, B2B AI, CRM, Cybersecurity, Database Management and Marketing Automation—to identify themes across B2B Products. The study began with a simple prompt to thousands of B2B buyers across these categories: Given these three market leaders by market share, “Which companies/brands do you see challenging these leaders over the next 5-10 years?” The findings resulted in a relationship between overall brand perception and brand momentum.
Brand ranking is king
Our findings were eye opening. The initial study identified a critical determinant of purchase behavior: brand ranking. Overall brand ranking within the product vertical was the strongest single indicator of present and future purchase intent. By evaluating the brand’s current position and tracking its trajectory over time, we discovered a new measure—”brand momentum.” This momentum, if positive, serves as a predictor of future category leadership or, if negative, as an explanation for anticipated decline in growth. When looked across this spectrum, a much clearer picture emerged for each product category. Overall brand ranking and brand momentum were a better predictor of valuation premiums for earlier stage companies and explained stalled growth or profit declines for publicly listed entities.
One product category that was profiled was Database Management, where SAP, a leading incumbent, is actively challenged with AWS as a strong example of a challenger changing perspectives.
What the Index answers is what is driving that weak score from the end-customer’s perspective. SAP has negative brand momentum, led by a large share of brand detractors across every measure, influencing purchase intent and use—it is not just one thing impairing SAP, it is across the board as reflected below.
Profitability and market leadership
An undeniable revelation from the study was the importance of profitability. Incumbent market leaders were all profitable across all six product categories, cementing profitability as a prerequisite for sustained category leadership. The study also found that while emerging brands were not expected to unseat the behemoths of industry immediately, their innovative approaches forced market leaders to adapt or face likely decline or potential failure.
Technological relevance
Another facet of the Index is the assessment of the technology being promoted by brands. The evolution and innovation of a company’s technological offerings are seen as vital to securing a brand’s future in a rapidly changing market. Consistent with this theme were older companies that were seen in a positive light. They consciously retooled and proactively invested into next generation technology if they were clearly behind in current generation competitiveness—frequently with proactive market updates to what their brand was about going forward. The absence of communication about next-generation initiatives was consistent with brands that have historically higher market share but low or no presence in the Challenger Index.
Beyond financial metrics
Using financial metrics as the sole measure of business strategy success doesn’t work. In the past several years we have seen purely financial metrics such as ARR, NRR, ACV, etc., mask underlying behavioral metrics as customer retention and churn—the foundations for why financial figures are there in the first place. Avasta regularly analyzes the market with “Finance is a layer” as an interpretive approach of underlying behaviors, or their absence—as in, prospective customers with negative brand perceptions don’t become customers. This insight is missed almost unanimously by executives. Revenue you never booked doesn’t show up on your financial statements and is frequently not thought of as part of setting strategy—if that revenue is winnable because of a stronger brand, it becomes a financial imperative to understand the brand as a business driver.
The role of belief and shared values
Liquid Agency’s efforts highlight the significance of shared beliefs in cultivating brand growth. By orchestrating brand experience (BX), employee experience (EX) and customer experience (CX) around a unified brand belief, the Index underscores the necessity of alignment with market perceptions. This approach fosters a community of believers—employees and customers alike—who advocate for and engage with the brand beyond transactional interactions. Believers are a critical component of activating a brand in the marketplace and are the canary in the coal mine with regard to your brand momentum being strong enough for the generation of category purchase.
Recommendations for B2B executives
Drawing from the Index’s insights, several recommendations have emerged for B2B product executives. Among these, understanding the customer’s reasoning for choosing their brand over a competitor’s is paramount. Additionally, comprehending the makeup of the buying team and ensuring that the brand’s defined value proposition resonates with the market’s definition are crucial for alignment and success.
Lastly, it is critical to understand when the current or prospective customer can buy again—too often companies are trying to force a sale through to meet their own internal targets, impairing their relationship with customers. The “5% of B2B buyers being in market at any time” is a falsehood; it varies greatly for each product category. Find out yours.
The authors wish to thank Nicole Bethell, senior client advisor at Avasta, and Nick Childress, director of growth and marketing at Liquid Agency, for their contributions to this article. The Liquid x Avasta Challenger Index for B2C Product brands will be the next in our series.
