Trends in HR Marketing: HR Buyers Behavior 2007

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1 Trends in HR Marketing: HR Buyers Behavior 2007

2 Abstract This research report, conducted by HRmarketer.com, covers the latest trends and best practices for marketing to human resource (HR) and employee benefits executives and professionals. The data in this report is based on responses from human resource and employee benefits buyers, hereafter referred to collectively as HR buyers, collected during Q1 and Q2 of The key trends outlined in this report tell us the following about HR buyers and their buying process:! HR buyers increasingly rely on the Internet as a trusted source of information when making purchasing decisions;! HR buyers don t value traditional print media as a primary source of information compared to other online sources and even less so than in previous years;! HR buyers are participating in the growing popularity of blogs, podcasts and webcasts as sources of information;! Other departments (IT, Finance, etc.) continue to influence the purchasing of HR products and services;! HR buyers place increasing importance on a vendor s online visibility, including the vendor s own web site and their search-engine rankings. This report also includes information on which search engines HR buyers most often use, how likely they are to click sponsored pay per click ads, what popular keywords HR buyers use when searching for various HR products and services, how often companies go out to bid for various HR products and services, the popularity of HR trade shows, and which functional areas represent the biggest challenge in the coming year. Lastly, this report includes recommendations for human resource and employee benefit suppliers based upon what we have learned about the needs and information usage characteristics of HR buyers. Introduction This report provides information on trends and best practices for marketing to the human resource and benefits marketplace, and more specifically on the purchasing behavior of the typical HR buyer. It includes an analysis of trends and the progress of the HR buyer through the purchasing cycle as well as the tools they use to progress through each stage. This analysis, combined with an understanding of how important online visibility has become for HR suppliers, provides readers with a better understanding of their target market and the best marketing tools with which to reach them. Methodology The research data referenced in this report is based on responses from human resource and employee benefits professionals and executives. The data was collected during the first and second quarter of

3 Survey participants represent diverse industries including education (7%), financial services (8%), manufacturing (13%), professional services (13%), healthcare (9%) and technology/software (11%). The titles of the survey participants included CEO / president / business owner (3%), Executive (4%), Director (38%), and Manager (18%). A variety of company sizes were also represented in the survey, from under $5 million (6%) to over $250 million (31%) in annual revenue. What is your role? CEO/President/Owner Executive 3.1% 4.1% VP 27.8% Director 38.1% Manager 17.5% Staff 9.3% What is your Industry? Construction and Trades Consumer Goods Education Energy and utilities Government Financial services Food services Healthcare Hospitality Insurance Manufacturing Media and entertainment Professional services Retail Staffing Technology and software Other (please specify) 3.1% 0.0% 7.2% 3.1% 1.0% 8.2% 0.0% 9.3% 1.0% 3.1% 13.4% 3.1% 13.4% 1.0% 0.0% 11.3% 21.6% 2

4 I Need an HR Solution. Where do I Start? When HR buyers were asked how they begin their search to identify vendors for an HR product/service, 43% said they ask a peer and 39% said they went to the Internet first. For those going to the Internet first, 25% started with a search engine. Less than 5% relied on a print trade magazine or buyer guide as a first stop for information. And less than 2% called an HR consultant. How do you typically begin your search to identify vendors for an HR product/service you may be interested in purchasing? (Choose one.) Ask a peer 42.9% Call a consultant 0.8% Internet search engine (e.g. Google) 26.1% Refer to a vendor's brochure or other marketing collateral that you previously received and saved for future reference Refer to a print buyer's guide or vendor directory 5.9% 1.7% Refer to an online buyer's guide or vendor directory 0.8% Industry print publication/trade magazine 5.0% Favorite HR informational website 14.3% Other (please specify) 2.5% Not surprisingly, Google was by far the most often used search engine of HR buyers who search for HR information online. A distant second and third were Yahoo! and MSN, respectively. Less than 5% used Ask.com and less than 1% used AOL. This is consistent with national trends showing Google, Yahoo! and MSN capturing over 95% of Internet search volume. However, in the corporate world of human resources, MSN and AOL get very little use. When asked how often they use an Internet search engine to search for HR information, nearly 50% said daily while 80% said one or more times per week. 3

5 How often do you use an Internet search engine to search for information related to human resources? Daily 46.2% Once or twice a week 35.3% Once or twice a month 12.6% Once or twice a quarter A few times a year Never 3.4% 2.5% 0.0% Fifty-seven percent of HR buyers who use an Internet search engine rarely click a vendor s sponsored ad, while 23% are somewhat likely to click a sponsored ad. Only 6% said they were highly likely to click a sponsored ad. Interestingly, only 13% of HR buyers said they never click sponsored ads, which is encouraging to HR suppliers who invest in pay per click. This is fairly consistent with national search trends, where research shows that about 70% of Internet users click on organic listings, versus 30% on paid listings. Organic search results are usually perceived as unbiased and therefore more credible than paid results. This is why marketers are well-advised to invest in SEO to boost their natural rankings. A major component to SEO is keyword selection the keywords and phrases that your buyers are likely to enter into a search engine when searching for products and services. Keyword selection is the single most important stage when beginning the search optimization process and the most important to monitor and refine over time. Only 23% of HR Buyers are somewhat likely to click a sponsored ad like these on Google. Knowing what keywords your buyers use when searching for products and services that you sell will serve as the foundation for your SEO initiatives you ll want to include these keywords in your META tags and your site body copy, and as keyword hyperlinks in your search-optimized press releases. In our research, we asked HR buyers to list keywords/phrases they would likely use in an Internet search engine to find information on various human resource product categories. Some of the responses included: 4

6 HR Product Category Assessments Compensation / Incentive Programs Compliance Employee Benefits HR Consulting HRIS and / or ERP Solution Payroll Services Recruiting and Staffing Screening Talent Management / Employee Relations Keywords and Phrases Skill testing, candidate assessments, testing, measurement, analysis, profiles, performance management, assessment, leadership, psychometric Pay programs, rewards, salary, wages, distribution, earnings, total compensation, compensation, executive compensation, salary surveys HR Compliance, compliance, legal, laws, regulation, and by specific compliance issue Benefits, benefits package, core benefits, health coverage, and by specific benefits question HR consultants, human capital consulting, expert, partner, specialist, consulting, coaching, organization development, outplacement HR technology solutions, HR systems, database, tracking, people, data, hris Payroll, value, chain, pay, wages, salary HRIS Recruiting, recruitment, talent acquisition, sourcing, hiring, recruiting tools, retention, hiring, staffing Background screening, background check, background checks, DOL checks, profile, review, screening, interviewing, candidate screening Employee relations, generalist, talent, growth, people, performance management, talent management, retention HR and Web 2.0 Joel Cheesman, popular HR recruiting blogger When it comes to webinars, podcasts and blogs, HR buyers are catching on. Ninetyfour percent of HR buyers participated in a webinar in 2006, 43% listened to a podcast and 52% visited a blog. Twentysix percent of HR buyers visit a blog one or more times per quarter, while 19% listen to a podcast more than once a quarter. According to research by Pew Internet, about 12% of Internet users in America say that they have downloaded a podcast so that they can listen to it or view it at a later time. Pew Research also points to the fact that on Podcast Alley, a website directory of podcasts, there were fewer than 1,000 podcasts in 2004 whereas in 2006 there were over 26,000. Blog popularity also continues to grow rapidly. According to research by comscore, blog visitations rose 56% from 2005 to 2006 to 58.7 million visitors, representing 34% of the total Internet audience. 5

7 The key takeaway for HR suppliers is that if you are not blogging and podcasting, consider doing so. If you don t, you could be left behind as more HR buyers seek out useful blog and podcast content for their organizations. Blogs and podcasts are yet further opportunities to take your message direct to your buyer, bypassing the traditional media where placements are more difficult and expensive to secure. Having a popular HR blog and doing regular podcasts increase your online visibility and reach. This is important considering how many HR buyers use the Internet to search for HR and vendor information. But remember, whatever content you put out there (webcast, white paper, blog, podcast) be sure to keep it non-promotional, educational and informative. How Important is Exhibiting? Fourteen percent of HR suppliers do not attend any HR conference or trade show and 72% attend three or fewer events per year. HR professionals working at companies with less than $5 million in annual revenue per year are likely to attend only one event per year, whereas those working at companies with revenues of $250 million or more will likely attend four or more events per year. HR events have always presented a conundrum for HR suppliers. Logic dictates that if you don t exhibit at key industry events, HR buyers may view you as less credible. If you do exhibit, you may find it difficult to quantify any ROI. Or maybe this year, you ll score heaps of great leads! So should you exhibit or not? In our experience, regardless of the type of HR product or service you market, HR suppliers should attend at least one or two key events per year in order to maintain an industry presence and credibility. We also highly recommend that HR suppliers should attend at least one or two key HR events each year, like the HR Technology event (above) where HRmarketer.com exhibits each year. senior marketing and/or company executives attend HR events. While sales professionals, not marketing, should always staff the exhibit (this is a sales function, not a marketing function), marketing executives should attend HR events in order to talk to buyers and understand their pain points, study competitors, and attend sessions to keep current with the discourse of the industry. However, when deciding how to allocate your marketing and PR budget, realize that a relatively small percentage of HR buyers attend any given trade show and even fewer will come into contact with you at the event. So, if your annual marketing budget is $100,000, think twice before spending $20,000 (exhibit space, travel, food, hotel, shipping, promotions, etc.) on an event where you may reach 50 qualified buyers (cost of $400 per qualified lead). You may be better served by investing in a few white paper download campaigns that include some searchoptimized press releases and a direct marketing campaign. 6

8 We recommend that HR vendors spend no more than 10% of their marketing budget on trade shows, because trade show marketing just doesn t usually pay for itself. How Secure Are You? HRIS and/or ERP solutions providers enjoy the greatest staying power, as 52% of HR buyers said they go out to bid for these products only once every five or more years. This is not surprising considering their high cost, implementation time and switching costs. Payroll vendors also enjoy high staying power, as 50% of buyers said they go out to bid only once every five or more years. For these reasons, vendors of high-end HR information systems and software should not be afraid to spend a higher amount on marketing and PR relative to other vendors. Previous HRmarketer research shows leading vendors across all HR product categories spend an average of 20% of revenue on marketing and PR. The majority of HR products and services were likely to be put out to bid every 2-5 years. How Often Does Your Company Go Out to Bid For the Following HR Products and Services? HR buyers said they were most likely to go out for bid (annually) for employee benefits; training & development; and recruitment and staffing services. Training and development Talent management / Employee relations Screening Recruiting and staffing PEO Payroll provider Outsourcing HRIS and / or ERP solutions HR consulting Employee benefits Compliance Compensation / Incentive programs Once Per Year Once Every 2-5 years Once Every 5+ years The reasons companies go out for bid vary considerably across HR product categories. For example, the number one reason companies go out to bid for 7

9 employee benefits (e.g., EAP, work-life or healthcare benefits) is to get a lower price, while price is rarely a motivating factor when going out to bid for PEO or talent management solutions. Other HR services where price is a motivating factor for going out to bid include background screening services and recruitment & staffing services. Understanding how often and why companies put your product out to bid is critical information for marketers because it impacts how you position your products. For example, marketers of employee benefit services (especially employee assistance programs and work/life vendors) must realize the commodity-like nature of their offerings and spend marketing dollars on differentiators like service, reporting or unique payment plans tied to participation. Trying to differentiate based on services or quality is often ineffective. What is the primary reason your company goes out for bid for each of the following? Training and development Talent management / Employee relations Screening Recruiting and staffing PEO Payroll provider Outsourcing HRIS and / or ERP solutions HR consulting Employee benefits Compliance Compensation / Incentive programs Decrease Operating Costs Price Negotiation Learn About New Products Other Solve Business Problem Required Stay Ahead of Competition About half of HR professionals said their company requires a formal RFP when purchasing HRIS/ERP and employee benefit solutions while only 20% of HR buyers said a formal RFP process is required for recruitment and staffing services. 8

10 HR Pain Points Which functional areas represent your biggest challenge in the coming year? (Top 5 responses) Recruiting and Staffing 30.0% Employee Benefits Compensation/Incentive Programs Talent Management/Employee Relations Training and Development 16.0% 13.0% 11.0% 10.0% Some pain points are more specific to larger companies. For example, talent management / employee relations is a bigger concern for larger companies than smaller ones, whereas companies of all sizes listed employee benefits and recruitment and staffing as a major concern. Which HR products and services are you likely to purchase solutions for in the next six months? (Top 5 responses) Recruiting and Staffing Employee Benefits Training and Development HRIS and/or ERP Solution Compensation/Incentive Programs 27.0% 25.0% 23.0% 21.0% 17.0% Marketing to HR Buyers Not surprisingly, HR professionals are more likely to respond to an HR vendor s e- mail than a phone call. When asked what their preferred method of communication with HR vendors is, ranked number one followed by webinars, telephone and HR conferences or trade shows. A reclusive 9% said no communication is preferred! Thirty-seven percent of HR buyers are somewhat or highly likely to respond to a supplier s direct marketing . This is significantly higher than national norms showing standard response rates of only about 2-5%. This wide gap is most likely attributed to the fact that HR buyers prefer over phone when communicating with those HR suppliers whose products and services they re interested in. 9

11 Once HR buyers found vendors to evaluate, 66% relied on peers when deciding which vendors to enter into a sales discussion with. White papers were the third most-often cited source at 45% and the fourth most-often cited source was a vendor s website content. Surprisingly, HR buyers put equal weight on analyst reports and Internet user groups/online forums both around 21%. 1 Industry Peers Vendor's Brand Name or Credibility 61.0% 60.0% Vendor Salesperson Vendor Website Broker or Consultant 34.0% 29.0% 37.0% Top five purchase influencers of HR buyers The message here is for vendors to actively engage in ongoing marketing and PR activities that lead to high visibility amongst HR buyers. In other words, if the buyer doesn t know who you are, they are less likely to consider you a credible brand. Which departments are involved in the purchasing of HR products or services? Finance/Accounting 53.0% IT CEO or Business Owner 32.0% 37.0% However, purchase influencers differ depending on the size of company and the type of HR product. For example, the CEO of a smaller firm is likely to be involved in the purchasing of almost any HR product or service whereas at larger companies they may only be involved in major purchases like HRIS. Regardless of the above research, HR suppliers must be able to answer some basic questions about their target buyers: 1. Who are they (by title)? 2. What are the typical demographics of your buyer? 3. Who are the influencers? 4. What are your buyers major pain points? 5. What events do your buyers attend? 6. What HR web sites and blogs do your buyers visit? 7. What print trade publications do they read? 8. And most importantly, how do these questions differ by target company size or sales channel? 1 The Wisdom of Crowds 10

12 Where Should HR Vendors Spend Their Marketing and PR Dollars? A lot of factors influence your marketing budget allocation, like type of product and/or service you sell, your total available market and current market share, your channel strategy, your selling price, the average lifetime value of a customer and more. However, far too many vendors don t carefully consider how much they should spend on marketing and where to spend it. As a general rule, you should allocate 20% of your operating budget for marketing activities. But regardless of how much you spend, marketers must be ready to accommodate prospects needs and meet them where they are whether that be online or via more traditional routes. Traditional methods of generating demand, such as print advertising, public relations and print-based direct marketing, are still perceived to be the most valuable tools for marketers. But broad-based brand advertising has proven ineffective as a strategy for marketing HR products and services, especially when used exclusively, because:! No single medium exists that can effectively deliver your message to the marketplace. For example, SHRM has 200,000 members, yet there are millions of potential HR buyers; so advertising through SHRM will miss most of your prospects.! It is not targeted, and a generalized message is always less effective than a targeted one. The flood of marketers who still rely on conventional tactics will likely get swept up and lost in the flood of competitive marketing messages. Prospects are searching online for information and assistance in determining what they need and who to buy from. To reach these buyers, you must have a significant online presence so that they can find you as they search for data, best practices, news and product information. Achieving greater online visibility requires use of multiple online tools, including a website optimized for search engines, use of online media outlets supplying relevant online content, blogging, and podcasting. Marketing 2.0 creates more opportunities for reaching prospective clients with a more relevant message and provides better metrics for measuring ROI. Without printing costs, online marketing lets you segment your prospects and tailor your message to the segments, which is proven to increase response. Additionally, online metrics such as website traffic, search engine rankings and qualified leads generated are easier to track and more significant evaluators of ROI than traditional branding metrics. Conclusion For more information about marketing and PR in the HR marketplace, look for more from the Trends in HR Marketing series. Each installment will include valuable research results from surveys sent to thousands of HR suppliers and HR buyers, as 11

13 well as analysis from HRmarketer.com s leading experts on marketing and media visibility. About HRmarketer.com HRmarketer.com is a service of Fisher Vista LLC, a marketing and information services firm focusing exclusively on the human capital industry. Through its Marketing PR services, the company has serviced nearly 500 human resource and employee benefit service providers, helping them generate publicity, website traffic, sales leads and improved SEO. HRmarketer.com No other marketing or PR firm understands the HR industry better than we do. PO Box 10, Capitola, CA HRmarketer.com. All rights reserved. HRmarketer.com and Fisher Vista are registered trademarks. 12

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