A high tech firm was looking to prioritize their plans for the coming year. The full senior management team was in attendance. In reviewing their efforts the head of marketing noted that they were averaging 12,000 hits per month on the company web site.
Unfamiliar with the term, the CFO asked what ‘hits’ were and before the marketing executive could answer the sales executive said. “It’s an acronym and stands for ‘How Idiots Track Success’ ”.
The story above is designed to highlight a point that I have read and heard about many times over, and that is apparent disconnect that seems rampant between sales and marketing but as a marketer, what if your sales teams raved about the quality of leads from marketing? What if marketing was pivotal in helping sales make their numbers? And What if sales and marketing could work effectively together - effectively.
Yet there really does NOT need to be a misaligned sales and marketing organisation. Let’s start by looking at what I have seen sales and marketing want. These are what I have seen and I am sure readers can add their own points of view:
I’m a sales guy and this is what I want from marketing
— Good qualification processes that are agreed with me, so I get high quality leads and not just excessive quantity.
— Consistent pipeline feed that allows me to manage my time effectively and meet or exceed my quota.
— Process which mirrors our standardised sales methodology. E.g. strategic/consultative sales methodology.
— Elimination of duplicate leads that have already been contacted.
— Elimination of double entry so lead data in our CRM system is complete and accurate when passed over to me.
— Help with managing those leads that are not yet that far along in the buy cycle but are nonetheless possible opportunities later down the line.
— Deeper mining within an account (‘triangulation’) to identify the pains and politics of the wider decision making unit.
— Marketing materials and assets that can support my prospects during all stages of their learning , scoping and selection processes
— Helping me with more accurate forecasting (dependent on better and more accurate understanding and profiling of opportunities and their propensity to purchase)
I am the marketer and this is what I want
— Demonstrable marketing ROI so I can prove and improve the results of my programs
— Multi modal closed loop integrated campaigns across all learning, scoping and selection stages that a prospect will go through e.g. blogs, podcasts, newsletters, micro-sites and proposition landing pages, telemarketing, events, direct mail etc.
— Better agreement with sales of what constitutes a lead, what constitutes and opportunity and all in between
— Agreed measurement metrics that bridge the gap across marketing and sales so we are all on 'the same page'
— Lead nurturing systems that ensure marketing dollars are not wasted and leads are followed up, diarised or qualified in or out, so we can continue to refine our processes
— In an environment where prospects are ‘pulling’ information, a more unified view of prospect touch points so we can better segment according to behavioural activity e.g. who downloaded the whitepaper, who clicked on the email link as well as outbound calling notes.
— Ideally, unification of touch points or ‘moments of truth’ in a single system of record like a CRM system so we can analyse behavioural action make real time decisions based on the derived intelligence of the those behaviours
— Marketing process workflow services and best practice to support all aspects of prospect and customer activity. E.g. An event registration. Outbound emails, registrations, reminders, pre event outbound calling, post event follow ups etc.
— Reusable campaigns across international markets that have the capability to be localised yet are consistent with overall brand.
The most common area of contention seems to be where sales and marketing meet. That is, around the sales pipeline and demand generation activities. The way to resolve such problems is to establish a common understanding of business objectives and establishment of an agreed vocabulary of what constitutes a good lead and an opportunity. Just as importantly, there need to be clear definitions of what does NOT constitute an opportunity. There need to be processes for lead nurturing and opportunity management as well as clearly defined processes of how leads are passed over from marketing to sales and how leads are followed up and reported on through the whole sales cycle, so that there is transparency for all. If you believe in the term ‘what you measure is what you get’ then clearly the measurement metrics also need to be considered. So ‘hits’ in themselves might not be wholly appropriate and the organisation should ask themselves what high level SMART (Specific, Measurable, Accurate, Relevant and Timely) metrics would be appropriate for analysis of progress against plan.
There really is no need to have a misaligned sales and marketing operation in any organisation and if that is the case then senior management and teams need to come together with a blank canvas and rather than naming and shaming, work together to build out an infrastructure that makes sense for the organisation and its raison d’être.
H.I.T.S - The disconnect between sales and marketing
A multi-modal approach to marketing? The new business imperative
As I have been marketing B2B propositions for several technology firms, some things have become very evident and I am sure many of the points will resonate with my sales and marketing peers:
- Complex sales with different buying influences and politics imply that as a seller, you are going to have multiple points of touch before you close the sale. I like the term ‘moments of truth’ to explain that each point of touch is your opportunity as a marketer to further establish or break the ongoing relationship amongst the universe of prospective organisations you touch.
- Decision making units in organisations go through cycles of discovery such as learning, processing and eventual vendor selection and therefore a one size fits all approach to marketing will not be as effective as recognition of the differing needs of your prospects.
- As we are in a ‘pull’ economy rather than a ‘push’ economy, prospect organisations come to us already highly informed. They are using newer collaborative and web technologies to refine their search and selection and are more knowledgeable even before we have recognised them as a lead or an opportunity.
- People are now more inclined towards self service, having information delivered to them in a manner they like and at a time to suit them.
Given the conditions above and the dynamic and ever complex changing ‘marketscape’ marketers need to think more systemically about how to plan and execute and enter into conversations with their universe of prospective buying organisations.
One thing for sure is that a single point of touch is not good enough and even less so now. As buyers go through their own lifecycle of discovery they will have differing requirements - from a recognition of a need, to how the utility of your offering will satisfy their needs. As the stages are different for every organisation then the associated messages should be too.
Single touch marketing such as an outbound calling campaign for example, in itself will provide you limited success. Organisations are leaving digital footprints everywhere and tracking such behaviours can prove highly beneficial when segmenting your leads and going through your own lead qualification process. The idea is to be able to track such footprints back to your sales and marketing automation systems and plan future actions based on such behaviours. As an example, take a prospect that attended a webinar and then scoured your website and downloaded your whitepaper. A month later you sent out an email blast and tracked that the very same prospect clicked through several of the links to landing pages. What if all those behaviours could be tracked back to a single system of record such as a CRM system so you had a more complete view of the activity against any particular prospect? Would that be valuable? What if you were now having an event with some of your key customers standing up and singing from the rooftops about your offering? Would that prospect be a candidate for an incitation? Most likely he would be.
The above is clearly a hypothetical scenario but the point I am making here is that by working out how your prospects engage and matching your outreach programs to those processes and by tracking behaviours you enter the domain of multi modal marketing and achieve better success in engaging with your universe. Think about it. Makes sense doesn’t it? None of this is pie in the sky and is all entirely possible today.
The question then is why aren’t even more companies taking a more systemic multi-modal view towards their intended target audience?
Organisation Strategies in a downturn?
I was recently directed to an article suggesting that Trader Joes, MTV and iPod were all born during times of recession and if handled correctly a downturn can be a good thing for a company. The article went on to suggest that whilst everyone else may be turning their backs on advertising, companies should be advertising more.
I am not sure it is totally correct to suggest that if handled correctly a downturn can be a good thing for a company. Sounded a little too much like journalist spin and I aplogise for a my slight cynicism here. Whenever there is economic movement such as growth or recession, there are going to be winners as well as losers. The examples quoted of MTV, iPOD and Trader Joes may indeed be winners but the article failed to provide their subscribers a balanced point of view - just to make their case and press home their point. However to the point to which I think article should have been making, a recession does not necessarily mean a downturn in organizational fortune.
The article really referred to companies who have all rethought what VALUE means to their customers. An example here would be all the costly feature/functions that your products and services have that are not really used or appreciated but are there more to try to keep abreast of the competition. Look at your word processor for example, how much of the functionality do you actually use? Do you even know about all the features? I certainly don't but perhaps I am just a word processor novice!
The premise is rather than cut costs, companies should look to eliminate those 'costly' factors that the industry takes for granted but are not deemed valuable to their customers and improve or enhance those factors that are. This can mean thinking out of the box and applying creativity to problems and you may say 'Easier said than done', but still possible nonetheless. So instead of benchmarking your competitors, you actually bypass them.
Benchmarking can be dangerous if used on its own as it can lead to market convergence with typical 'me too' offerings. When I talk about features/functions I am talking about all dimensions of the product/service offering such as how customers engage and how they are serviced well beyond the sale -all aspects of a prospect's processes from learning to scoping to selection and beyond.
This then leads me to the most interesting observation about the whole article that came my way. Why should organisations wait for a recession to do this? Imagine if they adopted the same approach during growth? Isn't that what true market oriented versus product oriented companies really do?
And to the last point, about advertising more and bucking the trend whilst others are scaling back. If nothing else it can provide you with more relative more share of mind. However I think the decision to do this or not must depend more on what your advertising objectives are and will have to be set against wider organisational priorities in times of scarcity and uncertainty. As the saying goes, sometimes you should take what you read with a pinch of salt.
Global Reach, Local Touch Marketing
Very few technology companies are restricting themselves to just a single geography and the term globalisation is a common term understood by most. But whilst there are increased opportunities associated with expanding your geographic footprint, there are also increased complexities with marketing and communication activities across borders.
The challenge for any marketing professional who has a multi-geographical remit is to maximize the best use of resources available across all markets, remove duplication and unnecessary overheads, ensure message consistency and yet maintain impact at the local level. There are also significant organisation benefits if the marketer is able to promote cross border learning and sharing of best practice amongst sales and marketing professionals in local markets.
There are basically two models that companies can adopt - a centralized or a localized model and yes a third option or a hybrid approach.
The central model
This is usually the early model for companies that have recently decided to step beyond their domestic markets or have generic products and services and where only a minimal amount of decision making is devolved to the local level. The main disadvantages of this approach arise from paying insufficient attention to the knowledge held by local teams, the differing cultures and style of work and the perceptions of the company in a particular territory. The central model also stifles cross border knowledge share.
The local model
The local model represents the complete opposite where there is little or no co-ordination between different territories. This may be deliberate - to give business units in each country as much autonomy as possible such as in the case where very local products and services are represented. Each country may then establish its own marketing and PR activities. The local model, with no organised co-ordination, has a number of disadvantages. Multinational companies have multinational customers who now expect to deal with the same organisation, regardless of location. The greatest danger of the local model is inconsistent messaging across the territories in which a company operates, leading to a dilution of core values and positioning. A lack of co-ordination leading to inconsistent messages for an organisation cannot only damage the brand in that territory, but the organisation as a whole. Furthermore, the overheads and administration costs are duplicated many times over in each country, leaving fewer resources for actually implementing campaigns and achieving desired results. It can become a costly exercise if you add up all the elements, yet there will undoubtedly be those at the local level who argue for an entirely local model. What they are in fact doing in many instances (apart from companies who have very different highly localised products in different markets), is arguing against a truly centralized approach. Enter the hybrid approach
The hybrid model
The hybrid model offers the optimum balance and takes the best features from the local and central models to create a framework which combines organised and deliberate central co-ordination alongside greater input and autonomy at a local level to programs that are both effective at a national and supra-national level.
In the hybrid model the centre is responsible for ensuring that the strategic elements of a program, such as key objectives and messages are consistent and appropriate for each country as well as acting as a conduit for information and best practice share. Typically when dealing across borders there are some local markets that may be less sophisticated in terms of adoption of your goods and services than others. The centre can assist here by creating reusable programs and assets which can then be tailored to local use. They can also cherry pick best practices from local markets and offer these as suggestions of fruitful campaigns for other markets. The centre has a significant opportunity to play here in conjunction with local functions in each country, and will work collaboratively to develop plans for the company on a cross border basis, with tailored programs developed for each country. The central hub will further reduce duplication and overheads by managing budgets, campaign evaluation and reporting to HQ.
Innovating ‘Value’
The significance of the term ‘value’ when considering marketing cannot be underestimated and signifies the association in the mind of the prospect organisation of the vendor’s 'total marketing offering' against its cost and will most likely be compared to similar direct competitive offerings as well as some indirect offerings in the marketplace. The key term here is ‘total marketing offering’ and implies that it is not just the product or solution itself which will be judged but the reputation of the organisation, the methods of engagement before and after the sale as well as the product/service benefits.
What typically tends to happen however is competitors tend to try to match or beat their rivals and get caught up the benchmarking trap. As an example, this could propagate itself as the addition of even more product features. But such strategies in themselves only seek to drive the typical ‘me too’ strategic convergence rather than truly create truly differentiated offerings that are deemed of superior value to end consumers. What actually ends up happening is that competitors create offerings that, on the surface, have more similarities than differences. All this does is make it more difficult for the buying organisation to comprehend what make your organisation unique.
Well that is the symptom and diagnosis. What then is the remedy? Kim and Mauborne pioneered the concept of 'value innovation' whereby you examine radically what constitutes real value for customers by asking fundamental questions such as:
What factors should be reduced well below or eliminated from the industry standard (because they do not constitute real value for customers) and
what new factors should be created or raised well beyond the industry standard.
The point of such an analysis is to look at all the elements of the product, service and delivery process and challenge previously held assumptions of what real value means. It actually implies bypassing the traditonal way of competing against your rivals and looking at the world through a different lens.
The suggestion is organisations should look at additional frameworks to think out of the conventional wisdom and look across substitute industries, across strategic groups, across complementary product and service offerings, across the functional-emotional orientation of an industry and even across time. If you can relate to this topic and see competitive convergence in your chosen space, I highly recommend you read the article below:
http://harvardbusinessonline.hbsp.harvard.edu/b02/en/common/item_detail.jhtml;jsessionid=QFL0W2MLDFHMIAKRGWCB5VQBKE0YOISW?id=R0407P&referral=7855
Creating Thought Leadership and Not Just Press Releases
In B2B tech industries, unless you are a leading brand and are almost guaranteed media pick up from your press release distribution activities you are going to be hard pressed to make serious headway into engaging with media.
One way is to use your customers as advocates for the company and pitch their success stories to the journalist community. That’s a very good tactic and an approach that I have used on several occasions to good effect. However media outreach is not just about switching on the light bulb a couple of times but about a continued flicker over a sustained period of time. To achieve this end goal you sometimes need to also consider other weapons in your arsenal and thought leadership is an appropriate and effective tactic.
Thought leadership aims to engage your organisation with media and their subscribers (and hopefully your future prospects). In the context which I am talking, it means innovative ideas with the confidence to promote or share those ideas with actionable distilled insights. The idea is to develop recognition from the outside world that your company deeply understand its business, the needs of its customers and the broader market in which it operates. Done well, it can help to differentiate your organisation from the competitive pack.
The question remains how do you go about considering candidate avenues for thought leadership and then develop thought leadership materials you can use to promote your organisation? A good PR firm that you can partner with is the right avenue but if they havent proposed the idea, here are some suggestions:
- Look at your current offering and understand the profile of your customers. Are they enterprises, small and medium businesses, specific industry verticals?
- Investigate the challenges they face. Don’t just look at the problems that your current solutions address but look to understand their challenges as a whole. As an example for Enterprises, do they have a proliferation or technologies? Are they facing increased internal complexity? Are they looking at consolidating technologies to standards? Are they facing increasing regulatory challenges? Examples for SMB’s – What keeps them up at night? Do they face challenges with how to grow their business? What is their exit strategy if any? What you are doing here is trying to attach to some of the wider business issues that your target customers are facing.
- Screen the media and web for challenges in your chosen sector. What is the sector talking about?
- Brainstorm areas that your solution can address, now armed with a broader understanding of your market and an understanding of what is currently resonating in the market-space.
- Develop some hypotheses that you can test and outline your unique points of view.
Points of view are statements outlining your organisation position. Without any evidence, they are just hearsay and will not stand the test of scrutiny by media or their subscribers.
The ways to test for and obtain substantiating materials are several:
- Screen for third party published research to back up your points of view
- Investigate your customers who can attest to the points of view you are making
- Commission third party analysts to add weight and add credence to your thought leadership. Whitepapers can be useful tools as an example.
- Conduct your own market research to substantiate your points
The next steps are to develop talk tracks for your key spokespeople and pitch the news to your target media. One way is to look at media forward features to plan ripe times for your media pitch. Another useful tactic is to pitch to a select set of media and then follow up with a wider press release. I have used the thought leadership route to good effect in several companies and measured the increased results through third party media monitoring services to determine relative share of voice against the competition in specific publications and within a certain time period. Settling for the status quo is far less exciting than demonstrating how your organisation can attach to the burning issues facing your intended target audience.
Best Practices in Customer Acquisition or Lead Management
Lead Management or Customer Acquisition Management is designed to generate new business revenue, increase visibility and improve the attitudes of potential prospects and therefore nurture chances of future business development.
Typically an organisation will engage in some form of lead generation activity which will invoke a response from prospects and therefore generate leads. The lead information (prospect details are captured) and then graded or qualified in some manner to determine validity such as propensity to purchase. Leads are then passed to relevant sales teams for follow up and process within their sales pipeline – hopefully for an eventual sale.
Seems pretty straightforward doesn’t it? But it can become quite complex and because the process involves many steps where leads are passed through some form of automation (web forms for example) and from marketing to sales and then through a sales pipeline – there are several areas which are typically prone to weakness and which marketers should be aware.
I am not going to talk about technology here suffice to say that there are some really useful solutions to aid the process in terms of demand generation and marketing management tools that are unified in a central CRM system of record. But there are some typical challenges currently faced with many lead generation processes and some recommendations on treatments to continue to perfect your customer acquisition processes:
Not enough leads are coming in to continuously fuel the sales pipeline.
Areas to look for here are around your lead generation campaigns and what mechanisms/channels you are using to fuel your customer acquisition activities and the comparative cost per lead that is deemed to be of acceptable quality.
What is the proposition? Have you tested that it resonates with the intended audience? What other avenues have you explored? Is your lead generation program another ‘me too’ proposition that drowns in the advertising clutter surrounding us all or is it something that your intended audience will wish view? Look at your projected lead generation plan and determine whether it needs to be re-planned, so you can achieve consistent throughput of leads. What may have worked for you in the past is no guarantee that it will work for you in the future so don’t get stuck in the status quo and look to brainstorm newer, fresher ideas and test those ideas out with your channel, your customers, your sales teams and non-customers. You might sometimes blame the lack of funding you have to achieve the desired business objectives. That is only a valid point for discussion if you have explored all other possibilities and demonstrated first that you have made your current investment stretch as far as it can possibly go. That way, if necessary, you can come to future budget negotiations armed with better facts.
Marketing say they are passing across many leads but they are of a bad quality?
If you hear anything like this in your organisation then it’s probably an indication of a misaligned marketing and sales function and something that as a marketer, you have a responsibility to address. If sales people are spending more time qualifying out leads that are not relevant to the business, then that is precious selling time that is being wasted, not to mention a sign that the lead generation campaign has not achieved its purpose. Good lead management practices should provide the needed connectivity and accountability between sales and marketing, enhance the effectiveness of both operations. Go back to the drawing board and determine what constitutes an acceptable lead. Try to use a nested segmentation approach (as my other blog entry on segmentation) to get more detailed insight in the profile of an acceptable lead that has a higher propensity to become a customer. Detailed interviews with your sales teams, channels, industry analysts, customers and non-customers will help you to develop insight. Look at your lead management processes to determine what attributes of the lead you currently track. If you could obtain a little more information, would it help you and sales to better qualify the lead earlier on in the process? Go back to your lead generation activities and determine whether they are appropriate for your business. What other options may be available to you to obtain leads of a better quality. Note that it is just as important to understand how to qualify out the leads that will not transfer into revenue as it is to qualify in. The single metric of 'number of leads' alone is part of the problem and I have seen it used before. But isn't it far better to have 5 leads that will close than 100 leads that will not? So its far better to look down the sales funnel at business that is closed and the sales and marketing activities conducted to get to closed business, so you can gain more insight.
As a marketer you have no visibility on the follow up on leads
If as a marketer you pass across leads and don’t have visibility on how those progress (or don’t progress) through the sales pipeline, you are only looking at half of the opportunity. Again this is where sales and marketing need to be unified. If your organisation has a centralised CRM system you should ensure you are obtaining adequate analytics to ensure you obtain valuable insight into the success of the follow up process after leads have been developed. You should also work with sales to ensure that you are building a ‘keep informed’ database of prospects that might not be ready to purchase just yet but are nevertheless potential future customers. These are a useful pot of prospects you could use to keep informed and continue a communication dialogue with. A key area here is one of opportunity management, where leads are asked to be called back in a predetermined amount of time. Ensure policies and procedures are in place for either the sales teams to undertake this or for leads to be passed back to marketing to manage this process.
They key to successful customer acquisition management relies on involvement and buy-in from all and organisations need to take a systemic view of the whole process from cradle to grave, whatever that defined process is. It is about agreement of objectives and responsibilities of all and determination of the agreed steps and even refinement and re-evaluation if that is needed. The processes are more akin to a science whilst the specific tactics used to generate leads in the first place are more akin to an art. As a marketer you need to possess both.
Salesforce and their Blue Ocean Strategy
Former Oracle executive Mark Benioff created a hosted on-demand customer relationship management (CRM) solution called Salesforce.com in 1999. He pioneered the concept of delivering sales, marketing, and customer service applications, via a simple web site.Marc Benioff is chairman and CEO of Salesforce.com. A former Oracle executive, he founded the company in March 1999 with a vision to create an on-demand customer relationship management (CRM) solution that would completely force the industry to rethink its go to market model and replace traditional enterprise software technology. Benioff is now regarded as the leader of what he has termed "The End Of Software," the growing belief that on-demand applications can democratize CRM (and possibly other applications in the future) by delivering immediate benefits to companies of all sizes at reduced risks and costs.
Under Benioff's direction, Salesforce.com has grown from a groundbreaking idea into a publicly traded company that is the market and technology leader in on-demand CRM. For his contributions both in computing and the community, the Software Development Forum — the leading source of information and education to the technology community — has named Benioff a Silicon Valley Visionary.Its hosted software model has been a huge success with small and medium businesses (SMB) and mid market customers and has now begun making inroads into larger enterprises. Employee headcount was the typical basis by which the industry would segment their prospect base for CRM solutions.
The industry made an assumption, that number of employees would in turn imply a necessity for requirements that are more complex in terms of features and functions. However, by ‘de-segmenting’ the market and looking at exceptional buyer value across segments and looking for commonalities across non-customers, Salesforce created a new mass of buyers that traversed the traditional segment boundaries. Smaller buyers are trading upwards from ‘off the shelf’ shrink wrapped basic contact management solutions and larger companies are trading downwards from unwieldy deployments that required a heavy element of professional services and customisation that were a headache to roll out and administer. Admittedly, the Salesforce customer base of remains a fraction of Siebel's 3.4 million, but its business is growing much faster:Mark Benioff challenged the traditional ideas about typical software delivery prevalent in the traditional ‘Red Ocean’ of the CRM industry, which was overcrowded, highly competitive where it was becoming harder to differentiate competitive offerings. He challenged the traditional client-server approach to software delivery and pioneered exceptional buyer value. In a recent discussion session with the press and, analysts, he used a question about the recent Oracle/Siebel union as a launching point for an extended comic riff on "Oracle Cold Fusion," as he termed Oracle's plans to integrate its growing collection of applications on one architecture, code-named Fusion. "An Oracle sales rep shows up to sell you CRM -- which CRM?" Benioff quipped. "J.D. Edwards? PeopleSoft? Oracle Classic? YouCentric? Siebel, OnDemand or on-premise? They'll say, “Salesforce? They only have one CRM! How can they possibly compete?”The question remains how Salesforce achieved their success. To start, one needs to look back in time. In the 1990’s a group of companies offering hosted software across the internet floundered at the time markets were unsure of the security of business and personal data being transmitted across the Internet and second that the mindset of the time was that the web was too slow for running applications. By the end of the decade, those factors had improved. Alongside this background, the reader should be aware of the negative connotations surrounding the CRM client-server deployments and the negative press associated with lengthy deployments that were not always successful or delivering the anticipated business benefits. In essence, there was more hype than actual success.
One would wonder whether launching yet another CRM solution was a prudent business decision. Mark Benioff thought this an opportunity rather than a threat but to mitigate any risks timing was of the essence, since had he launched earlier the market may not have been ready for his new recipe. In keeping the first principle of Blue Ocean Strategy, Salesforce broke out of the conventional wisdom trap and pioneered to create a new value proposition that forced the market to wake up and listen.
Eliminate-Reduce-Create-Raise Grid Analysis
Eliminate
Which of the factors that the industry takes for granted should be eliminated?
· Requirement for client software on user desktops (vs. ubiquitous web browser)
· Necessity to develop of Proof of Concepts to show customers before they commit to order (vs quick online configuration and WebEx demonstration)
Reduce
Which factors should be reduced well below the industry’s standard?
· Expensive Direct sales force costs (vs.WebEx and telesales and word of mouth)
· Expensive Presales engagements prior to order placement (vs. good enough for a lot less)
· Long Sales cycles, typically 90 days or more. (vs. around 23 days using web method)
· Complex pricing structure - license, hardware, maintenance, support (vs. one fixes low cost per user per month inclusive)
· Development and maintenance of high-end product features that are not typically used (vs. less over engineered product focused on contact management and Salesforce automation- the bread and butter of CRM.)
· Customisation of products (vs. some IT admin configuration of products)Reseller channel model and thus increased costs to end users due to channel margin (vs. Web delivered direct model, which negates such a need.)
Create
Which factors should be created that the industry has never offered?
· Requirement for client software on user desktops (vs. ubiquitous web browser)
· Necessity to develop of Proof of Concepts to show customers before they commit to order (vs quick online configuration and WebEx demonstration)
· Free try before you buy (30 day trial)
· Low risk/low price rental model
· No need for expensive IT/admin staff to deploy and administer
· Manage once, deploy everywhere upgrades via web.
Raise
Which factors should be raised well above the industry’s standard?
· Deployment times - Reduce time to get customers up and running
· Develop a product extension marketplace, alongside technology partners. Similar to Amazon where you can view recommendations from industry peers. This recognizes the shift in power from sellers to buyers.
At the lower end of the market and at its most granular level, CRM software may compete with a rolodex (contact information), a drawing cabinet for case files (sales orders and documentation) and even an excel spreadsheet (forecasting/pipeline/contact database) to achieve the same purpose. Key features that prospective buyers may use to weigh up the alternatives include ease of use (rolodex), the need to get up and running very quickly, use of templates (e.g. by spreadsheets) for storing information such as contacts, sales forecasts, pipeline etc and a way to file associated documents relating to a process from lead-to-cash (e.g. with a filing cabinet) .
In understanding the trade-offs people would typically make between such substitutes, Salesforce was designed to be easy to deploy, use and quick to learn (unlike traditional competitors in the CRM industry). However, they went further than those substitutes and encapsulated sales and marketing ‘best practice’ in the business metaphors and processes used that were not offered by alternatives (spreadsheets do not typically come with a sales forecast template for example).
However, just looking at substitutes was not nearly what has made Salesforce a success. Some key insights from the six paths framework offer further insight into show how Salesforce were able to reconstruct market boundaries.Looking across timeHad Salesforce entered the market with their software on demand proposition earlier, they most probably would not have been successful, as has already been intimated. The market factors were not in place as bandwidths were too slow and reliability and security concerns were the order of the day. However as and when Salesforce saw that the market was moving towards thin client (web) adoption, that there was a clear trajectory which was irreversible, they mitigated their risks and made a big impact on the industry. The successful impact was not due to timing alone and Salesforce ensured that buyers received very competitive price points and less complex pricing structure, on a low risk rental model that did not include the necessity for buyers to invest in servers, professional infrastructure or customisation and maintenance. This new type of cost of to end users was only achievable because Salesforce was able to redefine it own business model in the industry and pass on savings to end consumers.
Had they wished to make incremental changes in the industry they would probably have offered a traditional client server model with some element of web-based access as well. Salesforce however did not go for that route. Instead, they decided to launch a new concept around the mantras of ‘success not software’ and ‘low cost, good enough’, which completely reinvented the way the industry thought about CRM and challenged the traditional value-cost trade-off that buyers were typically used to.Looking across complimentary products and servicesNo software solution exists in isolation, especially when larger company requirements are taken into consideration. It is common knowledge that Salesforce aspires to take on the traditional larger CRM players in their traditional marketplace - in the enterprise sector for corporate customers.
Whilst ‘low cost/good enough’ has sought to ‘de-segment’ the market place in the SMB and Mid market space, Salesforce have recognised that they needed to offer complimentary products and services if they are to attract the lucrative Enterprise customers and offer a well rounded complete solution. In September 2005, Salesforce.com added a new service that takes it closer to executing on the vision it now espouses – its AppExchange offering. This is a web-based portal giving companies access to a range of applications for on-demand use, ranging from financial and administrative applications, to applications focused on specific industries. The internet provides a more dynamic environment for accessing services than traditional means of distributing software.
The concept is similar to the online retailer Amazon.com, which fundamentally changed the way that people browse for books. In a high-street bookstore, people will spend time looking at a range of books, but the books that they are able to look through depends on the amount of time that they have available and their willingness to spend time going through all the different departments. At its online store, Amazon provides customers with the ability to search for books by title, author, or keyword and to compare books related to a particular topic in which they are interested. Amazon's service also recommends products to customers based on their buying history, search preferences or personal profile that they build. It is this same sort of idea that Salesforce.com has built with its AppExchange offering and allows recognises the balance of power has shifted to the buyer where can see a wide range of competing products and can read reviews from other users, as well as checking how other users rate additional products that extend the core functionality of Salesforce. What is more, this is a bonus for companies that do not wish IT budgets and resources to be tied up installing and managing software – especially those applications that are only used by a few people in the company. The growing ecosystem of global business partners dedicated to providing complementary products and services to Salesforce.com customers includes IBM, Microsoft, BEA Systems, Sun, TIBCO, PricewaterhouseCoopers, Miller Heiman, and many more.The question now remains for Salesforce is where to next. Other competitive players are starting to come downstream from their typical playing field in the client server space for Enterprises and offering on demand services for CRM. The main advantage for Salesforce.com favor is that of its brand equity and loyal customer following. However eventually, the company will most certainly have to value-innovate again. Perhaps moving from solutions for the front office to ones also intended for the back office. On the other hand, perhaps into trading exchanges where like- minded buyers and sellers come together to transact? What is clearly evident is that there is still a significant amount of non customers that represent a significant opportunity to Salesforce and my feeling is that they will continue their course for a while longer before they look at their strategy canvas again and try to value innovate a new divergent value line.
Recalibrating The Marketing Mix.
The 4 P’s of marketing (Product, Price, Place and Promotion) is the generally accepted ‘recipe’ of areas to consider when looking at any strategic position of a product in the marketplace and whether you agree or disagree that you should add more P’s into the mix or not, such as People and Packaging etc, I feel strongly that the recipe is flawed, quite misleading and does not force the strategic marketer to think through a truly market oriented lens.
The main bone of contention I have with the concept is that it is inwardly focused. When considering the marketing strategy for any B2B goods and services a better approach should be to approach the calibration through a different lens. My suggestion is that rather than 4 P’s marketers should consider 4 C’s. So, instead of Product think about Customer Value. Instead of Price, think about Cost. Instead of Place think about Channel and instead of Promotion think about Communication. By turning these attributes on their head marketers are forced to consider the impact of their decisions around their customer’s needs and wants and will be more market oriented rather than product oriented.
Consumerisation of the Enterprise
I have been considering an idea called ‘Consumerisation of the Enterprise’ which seems to be a fundamental paradigm shift happening right now. The younger generation, just entering the workforce, is more accustomed to the use of technology and Internet enabling tools. They are the Facebook, Youtube and mobile phone generation who have grown up with expectations around what technology can do and should do for them and have driven our ‘instant digital gratification’ culture. This is what is helping drive the Web 2.0 and Sales 2.0 movements in part. But the enterprise probably has less sophisticated enabling technologies at play than individuals are accustomed to in their personal lives. There does seem a gap here and one that organizations could do well to acknowledge, especially given the fact that their prospective customers are now more knowledgeable and discerning about what they want even before they come into contact with a vendor organisation. What am I taking about you ask yourself? Here is an example that relates to sales effectiveness of companies. Companies have spent millions on deploying CRM solutions in the expectation that their top line sales revenues would improve. Not always the case. Whilst CRM solutions have been useful at managing business processes, structured reporting and analytics, they have fallen short at getting improved sales results, shorter lead times and better order-to-bid ratios. In an effort to address the shortfall, organizations plan the typical annual religious sales kick off or the traditional classroom based training. That’s great, but what happens a week, two weeks or two months afterwards? How much of what has been taught is remembered or deployed in the field? What seems evident is that organizations need to consider alternative approaches that appeal to the modern workforce and work the way they like to work. Here is a scenario. What if you could ask a question related to a sales situation on your mobile or within your email system or on the web or even within your company’s CRM system and you were delivered short, quick hitting best practice advice you could put into practice straight away. Advice that you could consume any way you liked – text, audio or video. No committing to memory, no time away from the field and no lengthy curriculum. Just practical advice you could apply to improve the ‘how to do’ of the sales equation rather than just the ‘what to do’. That would be compelling. I don’t have the evidence to hand but would be willing to bet that this is one of those ‘unarticulated needs’ where once you had seen how such a solution could solve your problem, there would be no turning back.. And imagine taking this another step further. What if you didn’t even have to search in the first place? What if you could build intelligence such that the right knowledge could be pushed to you at the appropriate moment in time in a sales workflow (i.e. combining that with a CRM solution and your organization’s typical sales workflow process)…… There are significant opportunities I am sure and consumerisation of the enterprise is here and the boundaries between how people use technology in their personal lives will continue to drive how we use enabling technologies to better solve problems within the enterprise.
What comes first? Sales or Marketing?
Still a common misconception amongst many in organisations is that marketing is there to sell a company's products and services. Actually this is a rather limited view of true marketing. In the days when demand for goods and services outsrippped supply and consumers had little choice, things were different. However in the modern day, we now see the impact of globalisation, proliferation of products and a more discerning consumer where brand loyalty can change at the click of a mouse. These factors increase the complexity of the customer engagement process. Dr Philip Kotler says that 'Marketing is not the art of finding clever ways to dispose of something you make. It is the art of creating geniune customer value'. Marketing is therefore something that comes at the beginning of the process and even before products and solutions are created. It is the research and the understanding of the customer needs and wants and an identificatication of how an organisation can satifisfy those needs and make a suitable profit in the process. It is how the goods and services are positioned to a targetted audience that have been identified as having those identifiable needs. Also, marketing is an evolving process that does not stop at the sale but continues on beyond the sale to drive a loyal customer base that will become advocates for the company. So marketing comes first and marketing comes last. Actually successful organisations already know this and ensure that organisational processes such as manufacturing and sales - all centre around satisfying the needs and wants of consumers...
So, why this blog?
Welcome to my blog, which I hope you will find a little informative as well as enjoyable. I've always wanted to document some of the best practices and insights gained marketing solutions into the business to business arena in the hope that readers might gain some useful ideas as they continue to develop their own marketing careers. I would welcome your thoughts and suggestions on articles or key areas you think would be useful for general consumption. There still remains to this day, a general misunderstanding of marketing and over the course of time, I want to do my part to set the record straight.. So lets get started
A Primer into Segmentation
Segmentation has always fascinated me. There is actually a school of thought that proposes that we should de-segment markets (more of that when I discuss Value Innovation and Blue Ocean Strategy in another section). Here is the problem as I see it. I was in a restaurant in Scottsdale, Arizona last year. It was a fondue restaurant and a real nice set up. As I walked in I had a big smile on my face as I was taken by the ambience and the decor. But then the menu was presented, and I was taken aback by the huge selection of entrees, followed by the very vast selection of cheese fondue. Choice is one thing but it was the most complicated menu I had ever seen and we ended up expending an excessive amount of time just ordering our meal. It was my opinion that the restaurant had overdone their segmentation to the point that the excessive choice was providing me very little incremental value. What is more I couldn't help asking myself how the kitchen could manage such a large selection yet still maintain consistent quality.
But segmentation, if done properly, allows organisations to better target their offerings to those that most need them. All organisations work with finite resources - money, people and time. What is more, rather than a 'hit and miss' approach to marketing, it seems logical to identify those prospective customers that are more likely to adopt your goods and services and possess needs that your goods and services are designed to satisfy. In a nutshell that is what segmentation is about and it is the recognition that it is the way marketers cluster customer's differences – which is the key to successful marketing.
Successful segmentation sits between marketing to the masses and one-to-one marketing to an individual and the key to a selected segment should be that it should have a sufficient potential size to justify the time and effort involved in marketing to it.
Examples of how companies segment in the B2B world include macro and micro segmentation. Macro segmentation involves segmenting the market by factors such as company size, SIC code and the purchasing situation (i.e. new task, modified re-buy or straight re-buy) whilst examples of micro segmentation are buyer decision criteria (quality, price, after sales service etc), perceived importance to the organisation's business and the structure of the decision making process.
Clearly macro based segmentation alone offers only a broad overview of likely candidates and the micro based factors allow you to refine your ‘attach to’ segments. But there is a tradeoff in terms of the cost and time to measure and test for these factors.
In essence segmentation is an important undertaking for marketers and the right approach for one company will differ for another. I favor the nested approach to segmentation where one moves from the outer nest to the more detailed inner nest as below:
- Demographics: industry, company size, customer location
- Operating variables: company technology, product/brand use status, customer capabilities
- Purchasing approaches: purchasing function, power structure, buyer-seller relationships, purchasing policies, purchasing criteria
- Situational factors: urgency of order, product application, size of order
- Buyers’ personal characteristics: character, approach
As you move from 1 to 5 you are further refining your segmentation but the costs associated with gathering even more refined insight becomes more costly. The point here is to identify the correct collection of characteristics that make sense to your organisation, that can be measured and the collection of which, provide you with segments of adequate size that you can measure and market to profitably.
