Marketing Management – MENG Posts before 120717

June 8, 2017

The Path to Growth: Five Stages of Position-Product-People Alignment

For nearly any business, the path to growth happens when you know your market and have your product and your people aligned to the needs of that market. For young companies, such as the technology startups with which I work, this alignment can make the difference between a future IPO and shutting down the business.

Exceptional Growth Requires Expert Navigation

As companies start and grow, they begin to discover not only their own expertise, but, more importantly, their market, its niches and segments, as well as its quirks, needs, and wants. I think of this as navigating the discovery of a new land, full of opportunity and fraught with danger. Finding the path to growth is challenging, but the closer you get to your particular path, the more rewarding it becomes.

The path to exceptional growth is the precise alignment of your product (and capabilities), your position (the needs and wants of the market), and your people (their execution of your processes).

Most businesses go through five stages of alignment:

I’ve outlined this for a typical technology startup, but this can apply to any business or product line.

1. Suspicion

When a company is just starting out, the founding idea comes from some knowledge that a handful of potential customers may need something like the product being contemplated and a founder’s belief she can address that need differently from how it is being solved now.

The market is unknown territory. Whether there are more than a few potential customers is unknown. Any knowledge of a path to growth is nothing more than a suspicion. The product is brand new, so it is still trying to find the needs with which to align.

2. Discovery

As the company starts to sell products and find customers, it has also found a wider range of ways its product meets the needs of a wider range of customers. There may be little consistency from one customer to the next, but they all find the company has something that meets some set of needs.

This stage of discovery is an important step for every company. The company learns some of what is possible and can start to consider which of the many types of customers will suit it best.

At this stage, there is still very little alignment among position, product, and people, as the company is trying to do everything it can to meet the needs of any customer who shows up. The most common cause of failure at this path to growth stage is a product that is not growing to meet these diverse needs, meaning the company can’t deliver on its promises.

3. Map Making

The company has now become more adept at finding customers and finding ways to discover and meet their needs. While there may be little consistency as to these needs from customer to customer, some commonalities are beginning to appear.

These areas of commonality are the segments and niches in the company’s market. Knowledge of these shows the company what will work best for its own strategy and objectives and will eventually help it better understand how to compete with direct and indirect competitors.

This is where alignment becomes critical. As the company learns where it can be most successful, understanding the needs of that segment and how the company can meet them differently from what has come before becomes critical to continued growth and advancing to the next stage.

The most common causes of failure at this stage are either not seeing the emerging segments making it hard to focus, or not continuing to build product that meets the needs of the coalescing segments, again causing the company to miss keeping its promises.

4. Navigation

The company has seen success in one or more segments and must now choose to focus on one at a time. Exceptional growth requires thinking smaller. Let me repeat, as this is not always intuitive:

Exceptional growth requires thinking smaller.

Focusing on one position in the market—one set of needs, met in a differentiated way, in one segment—allows the company to build a product, train its people and develop processes to focus on demonstrated success—and start to repeat that success. This repeatability is the key to scale.

The most common cause of failure at this stage is not aligning product and people with the chosen position—the needs of the customers in the company’s market segment. This is lack of focus, one of the critical elements of exceptional growth.

5. Acceleration

With product and people aligned to position (market needs), the company is seeing an increasing number of customers, as well as a decrease in the effort it takes to find a customer. The repeatability inherent in focusing on a chosen position allows the company to scale its operations and delivery in a very precise way.

This same repeatability at this path to growth stage allows the company to define segment after segment and pursue them in the same way that it pursued the initial segment, creating another layer of scale and accelerating growth.

The most common cause of not being able to achieve this scale is not getting the people and processes in the company aligned to delivering the needs of the chosen segment(s), causing the company to stumble in execution.

Understanding your market and how you can meet the needs of the customers in that market in a different and differentiated way is the foundation of creating exceptional growth for your budding business. Once you get your position right, precisely align your product and your people to that position, and you can find your unique path to exceptional growth.

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March 16, 2017

Overcome the Fear: Three Steps to Effective Pricing

Marketers hate figuring out effective pricing. It often seems challenging or obscure, and the risk of getting it wrong seems so high. After all, what you charge for your offerings ends up determining your revenue. Price too low, and you harm your revenue stream; price too high, and you drive potential customers away.

There are two major schools of thought about pricing: one that says you should price your offerings to match the willingness to pay of your potential customers and one that says you should price your offerings based on what it costs to produce and deliver them so that you achieve a chosen margin.

Many companies, notably those that manufacture products, use a cost-plus method to determine effective pricing. The motivation to earn a given margin is certainly a strong one, but this approach ignores market realities. The economics of any market show that potential customers are willing to pay based on a range of factors, from supply and demand to delivered value to competitive pricing.

That leaves value-based pricing as the more viable approach. But unless you have a team of econometricians at your disposal, it can be hard to determine the right price to extract enough, but not too much, value from the market and your customers.

The Three Steps to Effective Pricing

Here are three things to do to get your pricing right:

Know the competitive landscape. You need to know who your competitors are and what they charge. But that’s not enough. Don’t forget that “competitor” means anyone―even if it’s the contractor paving the parking lot―competing for the same budget dollars you hope to get. Know what they charge. If you can’t find out from public information, ask your sales reps because their prospects are telling them. On top of that, figure out your competitive position. Are you a leader? A follower? A price-setter? A price-follower? A premium offering? A value alternative? Once you know that, you can set price compared to your competition.
Know the history. What have customers paid in the past for your offering? Other similar offerings? You don’t have to deliver exactly the same as always, but unless you’re selling to the few truly innovative potential customers or are a completely new offering, you can only change price levels so much―but you can change them.
Get your packaging right. What do your customers value most about your offering? Can you break out parts of your offering and price them separately? Can you add new pieces that will deliver additional value? Do you offer any services your customers especially value? Make sure your minimal offering delivers value but also make sure you add value where you can.

Once you know the answers to these three questions, you can choose your price level. When I do this, I always sit down and write a price list. That tells me what I have and what I’m missing. Once you feel you’ve documented everything you need, you can validate your thinking with a little market research (I usually just call five to ten potential customers and ask if it makes sense).

The last step is one where most marketers should feel comfortable: Test, test, and test again. Pay attention to how potential customers react. Are they balking? Or are they eagerly accepting your new pricing? Did you get your base product right, but your add-ons are too high? Make adjustments. Then keep making adjustments until you don’t see many more needed.

Marketers may hate of fear the idea of doing any pricing analysis, but these three steps can help take the challenge and put it into a context that is much more familiar and easier to approach. And, I hope, make it less scary.

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January 26, 2017

How to Prevent Your Biggest Strategy Mistake

It seems like a pretty simple statement: getting your strategy right and avoiding a strategy mistake is critical to getting the outcome that maximizes your marketing and business potential. Many companies, especially smaller and mid-size companies, tend to put lots of work into getting the strategy right, and they often come up with all the right answers. Even so, they are missing the forest for the trees.

Getting the right strategy for your marketing and business requires you choose the right strategy framework for your particular situation. No-brainer? Turns out it’s not.

Here’s an example: A young software company wanted to find ways to generate substantial growth. The natural model would be to expand their offering to their market and, at the same time, expand their market. This expands the definition of their capabilities along two dimensions at the same time, significantly increasing the potential to dilute their focus and investment.

After seeking advice, they found out the approach was completely wrong. They could have developed a strong strategy addressing larger markets with more offerings, but execution would have failed. It would have been hard to tell why, since none of the assumptions would have been violated―just the desired outcomes would not have happened.

They ultimately went with a strategy based on the business book, Crossing the Chasm. Doing this required a different approach: narrowing focus on a smaller set of customers initially and then growing from there. They avoided a strategy mistake, and this strategy worked as they are now on a very rapid-growth trajectory.

Why did this choice make sense? The premise of the strategy matched their situation.

The book describes the point at which the strategy makes sense as the point at which, for tech companies, customers become less visionary and more pragmatic. This was their actual experience, but until they saw that described, they would not have seen it explicitly.

Similarly, every strategic framework I’ve worked with has a similar definition of the conditions under which the strategy should be applied. The challenge is it’s hard to find it― most strategy books and frameworks will describe in great detail how to execute the framework but spend little time describing those conditions. You really have to look and pay attention!

Whether you need to cross a chasm or find some blue ocean or move in any direction, make sure your approach suits your situation, your market, your business, and your customers.

Or risk unexplained failure.

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October 4, 2016

Artificial Intelligence – The Next Marketing Frontier (and Danger)

Artificial Intelligence seems to be everywhere all of a sudden, and it’s making its way into the technology marketers use every day. We’ve been talking to (with?) our smartphones for a while now, and there’s pretty much no mobile device that isn’t just begging to hear your voice. With Apple adding Siri to the Mac, that now applies to pretty much any device. Amazon even has an eerily lighted cylindrical device that can play Jeopardy! with you―and presumably understand your stuttering, uncertain responses in the form of a question.

The Direction of Artificial Intelligence Operational Systems

It’s only in the past year or two that we’ve seen so-called artificial intelligence technologies make their way into operational systems and software used in business. And now we’re seeing some form of intelligent capability make its way into marketing. Here are a few examples:

Ad Targeting: Machine learning is working for companies such as Baidu to determine when any given user is most likely to click on what kind of ad, then automatically serving the right kind of ads for that user at that time. This attempts to maximize click-throughs.
Recommendation Engines: We’re all familiar with the jokes about Amazon’s (and other vendors’) “people who bought this item also bought” feature which often make less-than-ideal recommendations. Applying machine learning to large amounts of data on consumer behavior, however, can improve this dramatically. Under Armour is using IBM’s Watson to analyze its own customer purchase data with third-party data on fitness and nutrition to serve up far more relevant product recommendations.
Preventing Credit Fraud: Banks have been using massive amounts of data to try to determine when a particular credit card transaction has a good chance of being fraudulent. Now companies such as USAA are using natural language processing algorithms to look at the text within transactions to determine potential fraud even without a previous pattern having developed.

These examples are taken from a pretty interesting list of applications of artificial intelligence in marketing.

The key question for me is: How will this change marketing? I’ll offer some thoughts on where this is going, but first indulge me a short background explanation.

There are two main lines of thought in the computer science world about how intelligent systems (from software to robots and beyond) should act and interact with humans. One says we should be developing systems that are independently intelligent. Those systems would learn from the initial set of experiences humans provide but then would function on their own, without human guidance and making their own decisions. If this scares you a bit ―and it should―you can read an incredibly insightful speculation on this in Asimov’s classic, I, Robot.

The other line of thought says intelligent systems should be built to extend and enhance human intelligence. Sometimes this is called the “Star Trek” school of thought since that is how the computer systems on that show generally operated (and the independent androids were almost always evil―apologies to Mr. Data). The goal here is to help humans advance their own thinking.

A good example of the latter in the marketing world (and a function I really hope to see one day soon!) is the ability to ask your marketing automation systems questions such as “What are the top three paths people who buy our products take through our website?” and have your system know it needs to crunch the behavioral data to develop paths and determine outcomes. Even better, the system would know why. In this case, the system is not making decisions on website structure or how to present what information to whom, but it is telling you, the human decision maker, what you need to know to make those decisions.

Most of the examples of intelligence, including machine learning and natural language processing, that are in place today fall into the latter category: they exist to provide some form of information plus analysis to a human decision maker. There are a few examples of systems that are given jobs they do themselves (such as the ad server example above), but even those are assigned a specific job and decision-making framework by the humans who control them.

What Comes Next?

I think the next few years will bring a dramatic increase in the intelligent capabilities of all kinds that will be brought into business systems, including marketing systems. Nearly all these will fall into the data or language analysis category at first. They will do things such as answer customer-service requests or help marketers make sense of large sets of unrelated data.

But some will start to make some of the decisions marketers make every day. For example, IBM’s Watson technology analyzed millions of recipes and now can develop a (presumably tasty) recipe given a set of ingredients. That’s why they let it compete on Jeopardy! but not on Chopped! Imagine if Watson’s artificial intelligence analyzed the marketing mix of every company in your segment and added in the consumer behavior data. I’m willing to bet it would make marketing mix and timing decisions as well as any of us could―maybe better.

In the retail business, it’s not hard to envision the day when Apple’s intelligent ear pieces (version one comes out later this month in the form of AirPods) can remember that three days ago you mentioned you needed to buy new socks, and then remind you (literally putting a “bug” in your ear) as you walk by a sock-selling retailer that is doing location-based advertising with Apple. Today this feels intrusive, but as our artificial intelligence assistants become more intelligent, it will seem less so. It’s more like having your friend notice the socks in the window and asking, “Didn’t you mention you need socks?”

Will Marketing Change?

No. Marketing, as we sometimes need to remind ourselves, is a discipline, not a set of actions. We’ll still be doing it. But our jobs will change dramatically.

The predictions for future jobs are dire. This article predicts Robots (or some form of artificial intelligence systems) will take over 50% of all jobs within 30 years (the career span of someone 10 years out of school!). And if you Google “Jobs AI is Taking Over,” there is no end of similarly dire predictions. Many of those jobs are white-collar jobs.

Some of those will be marketing jobs. As systems get better at analyzing data and behavior, the jobs devoted to that will disappear. As systems get better at processing and responding to natural-language requests, customer-service jobs will start to go. And yes, as systems get better at inductive reasoning, jobs that focus on messaging and positioning (inducing target customer desires) will also go.

The flip side of all these dire predictions is that more intelligent systems will help the marketing decision makers make better, more informed, less biased and faster decisions. Those of us who focus on creative roles and on decision-making roles will get much, much better at our jobs, as our systems help us do better, faster.

Now, if Siri could only tell me where I saw that really cool gadget I wanted to buy. Or even reliably get me directions home. Then I’d be convinced we’re on our way to more intelligent systems.

Are you using intelligent systems in your marketing? Are they helping? I’d love to hear your stories.

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June 16, 2016

Three Ways to Find Your Marketing Creativity Again

It would be hard to find a marketer who would not agree that marketing has become much less creative and much more process-focused. We tend to idealize the 1960s world, stereotyped by the television show Mad Men, where the creative team ruled the business and the great idea was the best product marketers had to offer their client or employer. At the same time, we lament the rise of technology, complaining that marketing and sales automation has forced us into a never-ending loop of justifying our value based on whatever numbers our client or bosses choose to watch.

What Happened to Marketing Creativity?

It’s easy to blame the shift to more process-focused marketing on the rise of marketing technology and the associated capabilities of measurement. But it’s also true that we have used technology as a crutch, a substitute for our own creativity, in order to get things done faster, or, at times, with less hard work.

Don’t get me wrong: Automation and measurement are important to a functioning marketing team. Without it, you can’t scale and you just don’t know what’s working and what’s not. You need automation to deliver just the right message to just the right person at just the right time and to know whether you succeeded and whether the person took the action for which you were hoping. As marketing gets more and more personal, the need for technology to handle more tasks at a higher level of functionality will only increase.

Is marketing creativity getting lost in automation? I don’t think so.

Creativity, though, marketing creativity is the role―and the greatest contribution―of humans in marketing (and beyond). You can’t delegate that to an automation system. I think it’s time for us, as marketers, to remember it is still human creativity that drives our work; our automation systems cannot be the source of our creativity but rather the tools we use to automate and scale that creativity.

Is your marketing really as creative as it could be? Here’s an example of using technology as a substitute for marketing creativity. See if this scenario sounds familiar:

Your digital marketing team is about to launch another email campaign (the last one worked pretty well, right?). They decide on the new target audience. They then look at the last campaign in your marketing automation system and copy it. They edit the content to more closely match the new idea. They swap out the calls-to-action with new ones (which look surprisingly similar to the old ones―with apologies to Pete Townshend). They check it over and hit send.

This is how the vast majority of marketing is being done today. Email campaigns are being copied. Ads are being tweaked. Even paid search parameters don’t really change much. It’s comfortable. It’s easy to understand. It’s low-risk―both from an investment perspective and in how you have to explain the lower results (it was just like the last one―we thought it would work!). We accept incremental change and incremental results, because we can understand it. And because our marketing automation systems, which were designed to automate tasks, are being used as a substitute for creativity.

Nobody ever made a difference in any market by doing something just like what they had done before. You can insert the Apple branding story of your choice here, because the ways they changed thinking and changed consumer preferences is exactly the point (My personal favorite story about how ads changed minds and the market is the “Reach Out and Touch Someone” campaign.).

How do we put the marketing creativity back into marketing? It’s not easy, but it’s critical if you want to make a difference in your market, to your clients, and to your company.

Three Ideas for Putting Creativity into Your Marketing

Here are three ideas I use to get my creativity back into my marketing efforts:

1) Kairos

Morgan McLintic, managing director for the U.S. for Lewis Global Communications wrote an interesting piece for LinkedIn, titled Why You Aren’t Creative Anymore. He discusses the ancient Greek culture’s two different expressions for time:

Chronos, he explains, is the concept we understand as the ticking of the clock as time passes. It’s the way time gets measured and how time passes. It’s how we synchronize (notice the root word, chronos) to get a common understanding of when things happen.

Kairos, on the other hand, is a qualitative passage of time, similar to Csiksgentmihalyi’s concept of flow. It’s the place where we take the time to focus and create.

McLintic argues that the endless distractions and demands prevent us from creating the space for creativity. We are not just endlessly busy; we are distracted. We might be with our families, but we are thinking about work. We might be meeting with a colleague but really worried about the meeting with our CEO tomorrow. Focus―a key element of flow―is hard to come by. Plus, we live in a culture that values busy-ness. We are always under pressure to appear busy, even if we are not. That ends up creating more stress as we force busy-work on ourselves to meet the expectation we think our surroundings―especially our work environments―force upon us.

Getting that space is hard, probably harder than it’s ever been. But it works. Here’s how I saw that happen recently.

I was leading a messaging project for my company. We needed to not just revise our messaging but simplify it and communicate it in a clear, simple, concise way that anyone―in our market or elsewhere―could understand. Even if you do every day, you know this is no easy task. I took the usual steps, interviewing lots of people, consolidating feedback, looking for common threads and so on. When I looked at my output, I had four PowerPoint slides with messaging statements and explanations― anything but simple.

I threw it out. I found a quiet place and put on the music that, for me, tends to inspire but not distract me (Mozart’s Symphonies No. 40 and 41). I thought. I recalled everything every customer and prospect had said. I wondered why they bought from us. More importantly, I wondered what they were trying to achieve when they bought from us. As I sat there, the image came into my head of what must be in their heads. Then the word showed up that described it. Then I used the word in just the right sentence. And that was it. I had my answer.

Now, I stop just like that for every campaign I launch. I encourage my team to do the same. The result is I am starting my work with creativity―the critical element of marketing success. I’m not letting my marketing automation system be my crutch for marketing creativity; I’m doing the creative work and letting the marketing automation system do its job of automating what I created.

2) Finding Our Inner Four-year-old

Sir Ken Robinson discusses how our schools kill creativity. It’s worth the nearly 20 minutes to watch.

He tells this story (slightly edited for readability):

When my son, James, was four in England―actually, he was four everywhere, to be honest. If we’re being strict about it, wherever he went, he was four that year. He was in the Nativity play. Do you remember the story? No, it was big, it was a big story. Mel Gibson did the sequel; you may have seen it: “Nativity II.”

But James got the part of Joseph, which we were thrilled about. We considered this to be one of the lead parts. We had the place crammed full of agents in T-shirts: “James Robinson IS Joseph!” He didn’t have to speak, but you know the bit where the three kings come in? They come in bearing gifts, gold, frankincense, and myrrh. This really happened. We were sitting there, and I think they just went out of sequence, because we talked to the little boy afterward and we said, “You OK with that?” And he said, “Yeah, why? Was that wrong?” They just switched. The three boys came in, four-year-olds with tea towels on their heads, and they put these boxes down, and the first boy said, “I bring you gold.” And the second boy said, “I bring you myrrh.” And the third boy said, “Frank sent this.”

Kids will take a chance. If they don’t know, they’ll have a go. They’re not frightened of being wrong. I don’t mean to say that being wrong is the same thing as being creative. What we do know is, if you’re not prepared to be wrong, you’ll never come up with anything original―if you’re not prepared to be wrong. And by the time they get to be adults, most kids have lost that capacity. They have become frightened of being wrong. And we run our companies like this. We stigmatize mistakes. And we’re now running national education systems where mistakes are the worst thing you can make. And the result is that we are educating people out of their creative capacities.

Trust me, it’s much funnier when he says it. But he’s right. He tells the story―now pretty much folklore in the education business: when you ask a class of kindergartners who is an artist, pretty much everyone raises their hand. When you ask a class of sixth-graders the same question, only one or two raise their hands.

You probably can’t go to work and act like a four-year-old. But you can take the time and focus to let yourself play with your thoughts and ideas like you did when you were four, then take what you come up with, and put it into grown-up terms your colleagues will understand.

I can pretty much guarantee you show more marketing creativity than anyone―including you―ever expected.

3) Avoid Groupthink

This should be pretty obvious to anyone who’s ever tried to make a decision in a meeting. You know the pattern all-too-well: Everyone speaks, carefully avoiding stating an opinion, until the boss chimes in, then everyone suddenly agrees with the boss, showing how what they already said supports their agreement. This is not just a business phenomenon.

Brainstorming sessions are a really good way to avoid this. But most brainstorming sessions fall prey to the exact same malady. We are afraid to offer ideas that might seem too far away from the norm―or worse, too stupid. We want to be seen as part of the team, and we want to be seen as intelligent.

One technique I have seen used is to let everyone do their brainstorming alone, while in a group. In this approach, you might hand everyone slips of paper or post-it notes. Ask everyone to write down everything they can think of, one idea per slip or post-it. When everyone is done, collect the notes so they are not associated with any individual. Let the group get together and look at the ideas, then start sorting them out and prioritizing.

Groupthink is a very dangerous and insidious bias that can kill any attempt to offer anything creative before it is even stated. You probably know this intuitively. Avoiding the fear of groupthink will let you find a way to offer your marketing creativity and maybe make a big difference in your next project.

These three suggestions are far from the only ways to reestablish marketing creativity. I’m pretty sure you have a few other ideas (please offer them in the comments below!).

Reestablishing the role of creativity is critical to the success of your marketing efforts and to the success of your organization as a whole. It’s time to stop letting automation drive all our thinking and let it do its job―automating the creativity humans bring to the work.

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September 9, 2015

Five Critical Steps to Knowing Your Customers

It’s a trap into which marketers of all kinds fall: assuming your customers are just like you in their preferences, desires, and buying characteristics. It can happen because we lack information to figure out what customers are really like or because our own inherent biases cause us to ignore information that would contradict our assumptions.

In a series of studies (published in the AMA Journals), Hattula, Herzog, Dahl and Reinecke found that marketers putting themselves in their “customers’ shoes” were more likely to assume their customer is just like them rather than the generally expected outcome that they would understand their customer’s needs and desires even better.

In an interview with the Harvard Business Review, Hattula noted, “That tendency [toward egocentrism] is so strong that we’re willing to ignore objective data when we make predictions about others.”

You Are Not Your Customers

Yes, he is saying that in our data-driven world, the more empathetic (and maybe more expert) we become, the more likely we are to just ignore the data and use our own intuition to make assumptions about our customers. If you’ve been in a marketing organization for any length of time, this should not surprise you (though it may be hard to admit).

Simply put: The more you assume your customer is just like you, the farther you get from building a relationship with and serving that customer.

In our daily lives, we develop relationships fully realizing that the people with whom we become friends or partners or any other form of relationship are not exactly like us. Success in each relationship requires that we develop an understanding of what drives the other person and how we fit into their lives—and how they fit into ours.

Consider this: You walk into a room, and a man approaches you. He tells you why he is in that room (at that event or party) and then proceeds to tell you he knows you must be there for the same reason. Maybe he harangues you to engage in ways that suit him well or to help him meet the people he wants to meet. You can tell pretty quickly this person had no interest in you or your needs.

When you make the assumption that your customer is just like you, you start off your relationship with that customer on the footing I described in the previous paragraph: you alienate your customer and make them feel like you have no real interest in meeting their needs.

This can be exacerbated by the common marketing practice of developing customer personas. Personas are just descriptions of prototypical customer types. If the egocentricity bias that Hattula describes enters your persona development process, the personas can start to look an awful lot like the people who are developing them (One way to check this is to ask someone who knows you but was not involved in the process to look at the persona and describe how much like you it is—as long as you can trust that person to give an honest answer.).

The Importance of Data

Marketing has become, for the most part, a data-driven endeavor. Marketers work hard to gather and analyze data on the actions of those who engage with the company, on how those actions lead to (or don’t lead to) sales, on the costs and ROI of specific marketing activities, on how customer usage leads to repeat sales, and on so many more things in your everyday activities. One of the things on which marketers have relied for a very long time is market research. Assuming it uses well-designed research, the data gathered can inform many marketing decisions and challenge many assumptions.

But challenging assumptions, especially within an organization, is very hard. When the data clearly contradicts any assumption we make about our customers—from buying habits to feature preferences—Hattula’s study shows we tend to just ignore the data—even when we know the best course of action is to adjust our own assumptions to match the data.

Where Does This Lead?

Hattula’s study suggests that employees who are disengaged from customers are in the best position to understand objectively what the data they receive is telling them.

My own experience says that getting a direct, personal understanding of your customer, including developing empathy (maybe by putting yourself in your customer’s proverbial shoes), gives you insights that data just can’t.

The irony is that in order to truly understand your customer well, you need to do a good job of both getting closer to them and distancing yourself from them. You need to:

Gain direct exposure, understanding and empathy with your typical customer’s needs, preferences and desires.
Ensure you are gathering good, unbiased data on customers’ needs, preferences, and desires
Pay close attention to even the smallest hint of contradiction between your empathetic understanding and what the data is telling you.
Get objective viewpoints that can tell you when your assumptions about your customers are really just a projection of your own needs, preferences, and desires.
Have the courage to challenge organizational assumptions about your customers.

Did I promise this would be easy? It’s not.

But if you want to stay close to your customers and continue to succeed in delivering what they want and need, in the way they want and need it, you will have to make sure you are meeting their needs.

Not yours.

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April 1, 2015

Rethinking Customer Marketing for the Subscription Economy

This is not your grandfather’s customer marketing. A business that depends on—or hopes to depend on—subscription (or recurring) revenue must relate to its customers in a fundamentally different way than a traditional one-time-sale business. But the changes go deeper than just the customer relationship. To be successful in a subscription business, companies must rethink their own business operations. Let’s take a look at what that means for marketing.

The question I ask you is simple: are you actually marketing to your customers? Or are you just keeping in touch and hoping they’ll stick around?

Customer marketing is one of the simplest business changes you can make to succeed in the recurring revenue business. You don’t need any new skills or expertise, and the processes you need already exist (I hope) in your current organization. The work you need to do is translating them to apply to your current customers.

The Journey and the Funnel

You have, undoubtedly, spent much of your marketing career thinking about—and seeing many different flavors of—the marketing funnel. I’m going to guess your idea of a marketing funnel or customer journey looks something like this:

This gives your marketing organization a good working model and, I hope, a deep understanding of how someone in the market becomes aware of your product or service and how they get from initial awareness to making the decision to purchase.

You also have a set of processes and practices that make your marketing work, make potential customers aware of your offerings and help them make the decision to purchase. These include marketing campaigns and programs, content development and distribution, branding efforts, and much more.

I hope in reading this so far, you’re thinking: “Yes, I do all of that really well. Why do I need to rethink this?”

Customer Marketing: Before

You might have a function in your marketing organization called customer marketing. Depending on how you’ve organized your team, this function does anything and everything from customer references, to success stories, to customer events and conferences, and to customer loyalty programs. You probably also have a way to keep customers informed of new products, updates, and other information you consider important, or that you think will help customers decide to buy from you again.

Rethinking from Day One

Day One is the day your customer becomes your customer, the day after the contract is signed, the day the customer starts getting value from your product or service.

It’s also the day your sales and marketing organizations step out of the picture and hand that customer off to your customer success organization. Every day from then until the customer leaves you, the primary contact for that customer will be in your customer success organization. That organization is then tasked (maybe via its own sales team) with ensuring your customer renews their subscription or comes back to you year after year.

In a recurring revenue business, the repeat or renewal sale is just as important as the initial sale. Sometimes, we assume this sale is easier because we’re dealing with a customer who has already decided they get value from our offering. That makes it no less important.

Rethinking customer marketing means treating your new actual customer on Day One just like the new potential customer who has only just become aware of your offering. Day One begins a whole new marketing and sales cycle. Day One means building a whole new relationship with your customer.

Customer Marketing: After

The goal is simple: keep as many customers as you can.

The process is simple: apply your current marketing funnel or journey, programs, and processes to your current customers.

The transition is not so simple: learn how your customers go from new customers on Day One to a renewal sale. Then how they do that again next year. And again the following year.

The transition requires you to examine both your business and your customers in new ways. You need to ask:

Why do my customers renew (not your long held beliefs; look at the data), why don’t they, and how do I tell the difference between customers who renew and customers who don’t?
What actions do I take right now that make a difference (again, based on the data) in whether customers renew?
How am I helping my customers realize value and renew?
Are my internal incentives (marketing, sales, and customer success) aligned with a goal of maximizing renewals?

Then you need to redefine your customer funnel or journey. It will look something like this:

Then you need to design marketing and sales programs, campaigns, and other efforts around that to help your customers move from purchase to renewal (not to frustration and departure).

Organizations that do this successfully create a microcosm of a marketing team within the customer success organization. This becomes a team that is charged with the full range of marketing and marketing operations functions (except corporate branding and PR, generally), and is measured on the same goals and outcomes as the marketing organization such as leads (which become expansion or adoption programs), conversions to sales (which become integration and realization of value), and sales (which become renewals).

Transformation to Customer Marketing

Rethinking customer marketing as though it were a full marketing function changes the way you relate to your customers. It can also have dramatic effects on the success of your renewal programs, bringing your renewal rates to new heights and your churn rates to new lows.

And, if you are having great conversations with potential customers in your market, imagine how valuable those conversations will be once your current customers—your loyal fans—are part of them.

How is your organization evolving customer marketing? Tell us in the comments!

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April 17, 2014

Escape Social Media FOMO : Ask the One Right Question

If your company or brand is trying to have a presence in every social media outlet possible, you might have social media FOMO (fear of missing out). But fear not, there is a cure, and unlike consumer FOMO, you don’t need to stop marketing completely.

“Don’t I have to be on every social media outlet? How will I find my prospects and customers?”

If you’re asking this question, you probably already have FOMO. You can escape FOMO with one simple question:

“Is this the media in which my prospects prefer to establish relationships?”

EAT24, in what is now a well-publicized move (much to their benefit), recently broke up with Facebook. If you haven’t done so already, you should read their tongue-in-cheek-but-entirely-serious rationale as well as Facebook’s response.

What they really are saying is they don’t believe social media (specifically Facebook, but this applies to any social media) is about blasting out ads to their fan base. Rather, it is about establishing relationships and raving fans. They conclude, given that Facebook allows them very limited organic reach, that they cannot succeed in engaging their fans and building relationships (even those based on sushi porn) in this particular media.

Will this cost them exposure? Yes. And while I have no inside knowledge of their media strategy, it’s easy to conclude there are other media which are more effective for their prospects.

They could buy more exposure on Facebook, but it’s also obvious that the amount and depth of engagement is simply not worth it—there are better places to spend that marketing budget.

Applying the test above, it becomes clear their customers and prospects don’t really prefer to build relationships on Facebook, so it’s not worth spending the time and money.

In another recent high-profile move, OKCupid strongly urged its customers not to use the Firefox web browser on their site due to the homophobia of Brendan Eich, the now former head of Mozilla, the organization that publishes Firefox. Given Firefox’s 10.5% market share (source: netmarketshare.com April 2, 2014), this could be a risky move.

Firefox isn’t a social medium, but it is an important means of accessing OKCupid’s services (and every other service online). OKCupid is making two statements with this action:

their customers and prospects care about equality and will act on that belief, and
it’s easy to engage with them using another browser (Chrome, Safari, etc.).

OKCupid clearly believes that once the information about Eich’s homophobia is known, Firefox is not where its prospect and customers will prefer to engage so it does not feel the need to be easily available in every browser.

Back to your brand: How much time and effort are you investing in making sure you are available everywhere—on every browser, every social media outlet, and everywhere else? Are these time and budget investments well spent? Do they have the expected or needed ROI?

You know who your customers are. You know which prospects you are trying to target. Make sure you’re spending your time and money doing what they need you to do to build those relationships.

So before making an investment in a new media outlet, ask yourself: Is this the medium in which my prospects prefer to establish relationships?

It’s a surefire cure for your FOMO.

May 9, 2013

Has Marketing Failed Sales?

A few weeks ago, at the Sales 2.0 conference, I noticed a trend: salespeople are generating their own leads. In fact, I heard pundit after pundit offer justifications for salespeople to be more proactive and take lead generation into their own hands, including statistics showing that as few as 30% of the leads sent to sales by marketing are worthy of pursuit.

Isn’t it marketing’s job to deliver qualified (or at least pursuit worthy) leads to sales? So has marketing failed?

Well, no, not exactly. There are two significant (you might call them disruptive) trends happening at the same time in lead generation: the individualization of technology and social selling.

Marketing is less well equipped than sales to take advantage of these. Sales, especially the individual salesperson, is far better equipped to experiment with new methods, processes, and technologies than any marketing department can be, if only because of the scale. And marketing has significant responsibilities beyond lead generation, including leading and developing the company’s relationship with prospects, customers, and all other stakeholders and stewarding the company’s brand.

But in order to be successful, marketing will have to watch these trends- and how salespeople take advantage of them- and figure out how to make them part of everyday marketing in order to stay relevant.

Trend One: The Individualization of Technology

Technology has migrated from huge systems only practical for large institutions to apps any individual can use anywhere, anytime. In the same way, systems which large corporations use to manage their resources are now available for individuals, including cloud based (SaaS) services such as CRM and marketing automation.

Companies such as Nimble and Contractually provide cloud based services that are designed for (and priced for) individual salespeople to do the essential parts of what a more cumbersome CRM system once did. They manage everything from contacts to social relationships to follow-ups to engagement opportunities.

What is important about this is these services can be used by an individual salesperson to find opportunities and generate leads entirely on his or her own, even while working within a larger corporate CRM system.

In fact, my friend Matt Heinz offered a wealth of tips and tricks (he calls them ”sales hacks”) for individual salespeople to use as a range of tools to create a robust lead flow- all independent of any marketing department (yes, this works very well for sole proprietors, too!).

Trend Two: Social Selling

Social selling means salespeople can use their social networks and the activity they generate to find prospects and identify buying signals. For example, if I were selling marketing automation software, and a 2^nd degree LinkedIn connection just took a new job as CMO (a possible buying signal) for a company in my market, I would want to contact that person. I might find that out through the activity generated in my own social network and then find out more about that person through their own social and other activity. I would then have a connection that can introduce me and would also know how to approach my newly discovered prospect.

Notice I am not looking in my CRM system for a lead that has not been touched in a while nor am I looking for an introduction from my management. Salespeople (presumably) have their own networks they can use to find the connections they want and need.

Services such as TwitHawk and Newsle offer this kind of social signal search service, and Nimble and Contactually integrate it into the activity stream.

When you put all this together, you have a powerful new source of very well-qualified leads for the salesperson to pursue.

So Where Is Marketing?

Marketing departments have done a very good job of adapting to the world of on-line and social media, and they have found ways to successfully get the word out. Marketing departments have also become very good at doing this on a large scale, just as they became very good at large scale communication in traditional media.

But even the most targeted integrated email and social media campaigns reach thousands- sometimes tens or hundreds of thousands- of people in the hope that a small percentage will be sufficiently interested to become leads and prospects.

Salespeople are looking at this from the other direction. They are ignoring the scale of reaching mass markets and large target audiences, and instead, using the power of atomized technology and social media combined to find the proverbial needle-in-the-haystack- who they are pretty sure is an interested prospect.

Can Marketing Adapt?

Should marketing change its approach and focus on finding individuals? No. Well, maybe.

Marketing must look after its whole scope of responsibilities and ensure there are strong relationships with customers, prospects, and other stakeholders. Marketing must also continue to use its ability to scale communications to ensure large audiences are reached.

In fact, without doing this first, the salesperson may never have the chance to find that one interested prospect.

But marketers must also become proficient in a world that has become individualized. This individualization has happened not only in how sales leads are found but also in how relationships and brand preferences are developed. Marketers must be able to take all the activities where they focus on the mass market and find ways to translate or evolve them into individual relationships.

It’s easy for individual salespeople to experiment with new methods and technologies, and they are finding some of them very useful. Marketers must find ways to experiment with new methods, processes, and technologies to find the ones that work in this changing world.

The challenge marketers face is learning how to scale this individualization to reach the mass audience so the company can scale its individual relationships.

And marketing can deliver more relevant leads.

Join the conversation: post a comment telling us how you are addressing this issue.

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Jeff Weinberger

DS3 founder Jeff Weinberger found his passion in helping organizations identify and develop critical, yet often overlooked, strategic opportunities. With a reputation for being innovative and, well, disruptive, he helps organizations maximize the value of their key relationships to create, adapt to and capitalize on disruption in their markets. A recognized thought-leader, speaker, writer and blogger on sustainability, disruptive marketing and Web 2.0/Enterprise 2.0 technology issues, Jeff’s writings can be found at http://www.dsthree.com/blah-blah-blog/ and at @jweinberger.