The Science of Marketing

I just read a post from Drew McLellan that is both simple and true.  In "Are Your Eyes Bigger than Your Budget," Drew reminds us that we have to draw a line when spending money on marketing.  The moral to his story, I believe, is not that we should cut back our spending to the point where we’re no longer marketing, but that we should let our budgets be our guides to prudent, effective programs.

There are plenty of ways to burn through a marketing budget without getting much return.  Sometimes I feel like a broken record when I say this, but the most important thing we can do is focus.  We should focus on the audiences that are critical for success.  We should focus on the conduits to those audiences that offer the most credibility and the broadest reach.  We should focus our messages on the one or two things that meet the audience’s urgent needs, while differentiating us from our competitors.  And most importantly, we should focus on our marketing goals as an acid test for green lighting any program.

Budgeting is a pain.  Always has been, always will be.  But an even greater pain than the act of budgeting is the realization that we’ve wasted precious dollars on programs that didn’t provide a return.  In order to avoid this kind of pain, focus on your audience, conduits, messages and goals before you start plugging numbers into a spreadsheet. 

Here it is, only two days after the historical election of 2008, and the campaign signs have already started to disappear.  I’ll miss them, because the multitude of ads that always seemed to congregate together at intersections and on hilltops always made me chuckle.  How could anyone’s message get through when there are 30 - 40 signs all vying for attention?

These masses of competing signs remind me of crowded markets, and how difficult it can be for a company to get its message across when so many others are plastering the neighborhood with their own signs.  When you find yourself up against several other companies that all claim to do exactly what you do, it’s time to stop printing signs, and start looking at your messaging and marketing mix.  Here are a few tips that might help your company slice through the noise.

Get to know your market and audience

If you expect to reach your audience better than your competitors, you need to know your audience better than your competitors.  By segmenting your market into a few manageable groups, you can talk to each group of companies based on their unique attributes rather than as a single unrelated mass.  But go beyond segmenting your market - profile your audience too.  Whenever there are multiple stakeholders involved in a purchase (as is often the case in high tech business to business selling), it’s important to separate those who can recommend, influence, overturn or approve a deal.  Once you know who you’re talking to, work to understand the unique concerns of each group as the foundation of good positioning.

Be Different

If your competitors are all saying the same thing, don’t join the party.  Look at what the other companies in your space are claiming, then find the holes in their stories that present an opportunity for you.  The more you can align a differentiated message with the unique concerns of your audience, the better chance your message has of getting through.

Change The Channel

Just because your competitors are printing signs, it doesn’t mean you have to.  Look at all the options available for generating awareness and find a venue that nobody else has thought of.  If all of your competitors are advertising in a trade publication, sponsor their monthly newsletter instead.  If everyone else has a booth at a trade show, secure a keynote speaking slot and sponsor their cocktail reception.  If everyone else uses lawn signs, get a blimp.  You get the picture.

Just because everyone else is saying or doing it, it doesn’t mean you have to join them.  The key to standing out in a crowded market is doing a better job of talking to people on their terms, presenting a better story than your competitors and selecting opportunities for awareness that nobody else does.  

In a recent post on Bizmark Tech, Deb calls our attention to some pointers by Suzie Gardner on what makes good material for a company blog.  One common thread that runs through most of the content areas she lists is information, and I couldn’t agree more.  If you want your company blog to become a resource for your customers, partners or anyone in your ecosystem, you have to give them something that’s useful, something that’s relevant, something they can’t get anywhere else.  You have to inform them.

What types of information should you provide?  Well…whatta you got?  I’ve seen high tech companies that are sitting on top of mounds of data about performance and security create blogs around this information - becoming authorities in their respective industries and generating massive media coverage because of it.  I’ve seen a building safety equipment vendor centralize publicly available research and legal information on its blog, providing a resource for its audience and creating awareness for its solution.  And I’ve seen an executive at a storage hardware vendor use his blog to discuss trends in data management and backup strategies, using his unique viewpoint to promote his company’s differentiation.

The point is, the people you want to communicate with are just outside your door, and they’re looking for useful information.  Chances are your company has some inventory of information that nobody else can provide to them.  By sharing this information with them, you can open the door to new conversations that position your company as an expert, as a resource, as a partner. 

The only question remaining are - what useful information does your company posess, and how can you leverage it on your blog?

In January, we wrote a post, "Getting The Brand Together: Consistency", which discussed brand promises - that what you say better be what you do.   Well, to do this you need to sit down and think hard about what it is you do and how to reflect that in your brand.  Consumer product companies have institutionalized this process.  High tech B2B companies to a less extent and high tech B2B start-ups not so much.

In the beginning, the usual process with a high tech start-up is: start a company, get a creative designer to design a logo, pick some colors and fonts.  Sometime later, messaging is developed.  So, the look and feel (visual brand) and the language (verbal brand) of the company are disjoint and possibly out of sync.  With so many companies vying for your audience’s attention these days, consistency is critical - so it is critical that the visual and verbal brand act as one.

There are three main concepts to think about when architecting an integrated brand.

1. The Word - Think about what your company does.  What word does it bring to mind?  Now, how can you get your brand to look like this word?
2. The Core Values - Think about how your company does what it does.  What values does it bring to the market.  Now, how can you add flavor to your brand that reflects these core values?
3. The Market - Think about your competitors, partners and customers.  What do their brands look and sound like?  Now, how can your brand stand out while fitting in?

By approaching your brand development in this structured way, you are more likely to have a tighter bond between what you say and what you look like.

One of my favorite marketing books is The 22 Immutable Laws of Marketing: Violate Them at Your Own Risk (Al Ries, Jack Trout).  Each chapter is a few pages, gets right to the point and gives a real-life example.  It’s easy to pick up and put down without forgetting what you’ve read before. My favorite law is #13: The Law of Sacrifice.

You have to give up something in order to get something.

Ries and Trout point out that there are three things you can sacrifice: product line, target market and constant change.  They give several examples of companies (Fedex, Smucker’s, Staples and others) that sacrificed one of these three things to increase revenue, improve margin and gain market share.

I think there is something to be learned here for high tech start-ups.

High tech companies are almost always started by engineers; and engineers can do anything - and often do.  Most of the technology that high techs introduce to the world could be applied to a number of problems.  And, it probably can.  So, what usually happens is the it-can-do anything technology is thrown at the wall like spaghetti to see what sticks.  The spaghetti approach, while perfectly understandable, can cause problems:  lack of focus, unfinished products and features, employee chaos and market confusion.  While the first three are internal challenges that can be sorted internally, once the market is confused it is hard to unconfuse it. So, while it’s OK to have long term vision and a five year road map; make some sacrifices in your outbound communications and make sure your messaging is simple, consistent and focused on one (or a small set of) problems and markets.   If you tell the world that you do it all, you probably won’t be believed. What have you sacrificed lately?

There are two granite compasses in my backyard.  One is aligned with true north; the other is aligned with magnetic north: 15° west of true north.  This summer someone asked me "why? who cares?"  Well, someone using a map to hike from here to there would care about the magnetic north compass and someone drawing a map would care about the true north compass.  Same thing, positioned two different ways for two different audiences.  This concept holds true for B2B marketing: the same companies, products and services must be positioned differently for different audiences.  This is especially true in the high tech B2B world where there are multiple audiences with diverse issues in the middle of the buying cycle.

Positioning and differentiation (more on this next week) are the two foundations on which messaging is built.  But, many high tech B2B companies often rush to develop messaging without mapping out positioning and, as a result, may ignore key audiences.  To avoid this, start positioning by identifying the key audiences involved in the buying decision.  In the high tech B2B, these audiences can be broken down into four broad categories:

• Technology evaluation - what does this do better than what we have?
• Operations management - how will it fit into my current environment?
• Business decision - will this help me make or save money?
• Risk assessment - will this company be around in a year?

Positioning should be thought of in terms of these audiences.  Remember many of these audiences have the same concerns, although their level of interest may vary for each issue.

The best way to pull the positioning together and document it is to map out a  positioning matrix as below.

This matrix gives a quick and easy read of three positioning statements, their supporting benefits and enabling product or service features correlated with the level of interest for each audience (H = High Interest, M = Medium Interest, L = Low Interest).  Beyond developing messaging, the matrix can be used by a company’s entire ecosystem for a basis of relevant and consistent outbound communications, whether it’s a piece of collateral or a personal conversation.

Could a little thought and a positioning matrix help your communications efforts?

I miss driving stick.  Revving the engine at a stoplight, dropping into gear and hearing the tires chirp, downshifting into a sharp curve.  Exciting stuff, especially with the right car.  But beyond the thrill of it all, there’s also something rewarding about working through the progression of gears that reminds me of well oiled marketing communications machine.

Much like a 5-speed transmission, marketing communications activities need to work in sequential stages to be effective, especially with more strategic sales.  Take, for example, a developer of enterprise-wide security solutions, where there are many stages in the buying cycle and several stakeholders involved in the purchase decision.  Customers for this type of solution aren’t going to a website, downloading a free trial and installing it.  They’re writing RFPs, kicking tires, calling in technical experts and getting their finance department involved.  Marketing communications for these high touch sales doesn’t begin in 5th gear - you can’t post a web site and expect a thousand people to click "Buy it Now".

It all comes down to understanding the buying cycle in a given market, looking at the stakeholders and learning about their chief concerns.  Think about first gear - where prospective customers begin the process of evaluating new products - and implement programs that position your solution as a viable option.  In second gear, when technology evaluators begin putting competitive products to the test, be sure your communications activities differentiate you.  Rolling into third gear, a business level audience may get involved, so you must be able to demonstrate how your product can improve the bottom line.  Fourth gear may target an operational team tasked with figuring out how your solution will impact existing systems and processes; so build some tools that demonstrate simplicity and integration.  And in fifth, when last minute considerations can derail a sale, be sure you have the information and materials you need to manage objections.

While audiences, tactics, and messages will vary, the approach holds up to any complex sale.  Phase your communications efforts to mesh with what’s going on in the buying cycle.  Those who try to close a strategic sale in first gear will find themselves spinning their wheels. 

Drew McLellan recently wrote about expecting too much from your marketing, concluding that "marketing takes time, repetition, and patience."  So true, and to that, I’d add a progression that jibes with the buying cycle.  What would you add?

OK, this may not be the kind of post that you print off and bring on vacation, but summer isn’t just about the light reading we stuff into our beach bags.  It’s also a good time to take a deep breath and ponder some heavy stuff.  With that in mind, what follows is some summer reading on how a good marketing strategy can directly improve a high tech company’s sales effort. 

While many professionals view marketing strategy as the groundwork for outbound communications activities such as public relations, advertising and web programs, it also has a tremendous impact on increasing sales productivity. High tech companies often allocate the majority of their budgets to product and technology development, leaving sales and the other departments to fight for what’s left. With a limited budget and a relatively small headcount, the sales force must be extremely efficient in identifying, cultivating and converting leads – focusing on the markets and customers with the highest probabilities of success, presenting their products in a way that solves real business problems and promoting their strengths and managing their weaknesses in the face of competition.

Segmentation

Given the luxury of an infinite sales force and a limitless sales budget, most entrepreneurs would love to sell their products to every customer in every market. Faced with the reality of limited sales resources, however, the wise entrepreneur knows that the key to achieving the company’s sales goal is focus. Conducting a thorough market segmentation exercise helps focus the sales effort on the markets, customers and applications that present the highest probability of success in the shortest amount of time. While pursuing fewer prospects may seem counter-intuitive to achieving an aggressive sales goal, going after the right prospects will decrease time spent in futile meetings and allow more time for closing quality deals.

Positioning

Closing quality deals means having quality conversations. In the high tech world, sales meetings often revolve around deep technology discussions with technology evaluators rather than business conversations with the real decision makers. While it is important to tell a compelling technology story to the people that will eventually be implementing your product, achieving an aggressive sales goal requires an understanding of where the business problems reside, who is responsible for solving them and how your solution can improve your customer’s business. Doing so means analyzing the buying cycle that your prospects go through as they uncover a problem, research solutions, evaluate products and plan for implementation; then identifying the stakeholders that play a role in each phase and understanding their specific business concerns. By positioning your product in the context of the customer’s business concerns, you can increase your odds of being selected by ensuring that your messages and value proposition resonate not only with technical audiences, but with the business decision makers that are actually empowered to buy your products.

Differentiation

Even with a well positioned solution, your prospects will undoubtedly seek out both direct competitors and alternative solutions to your product. Achieving your aggressive sales goal demands the ability to consistently win business at the expense of the competition, and doing so means being able to differentiate your product. Differentiation provides a foundation to promote the strengths and manage the weaknesses of your product against the competition, outfitting your sales force with the information they need to proactively frame discussions with prospects in the most advantageous ways, and overcome objections that might otherwise cost your company a sale.

This summer, when you think about how to improve your sales effort, think about this: how can a solid marketing strategy help your sales team?  I’d suggest that segmentation improves focus, positioning produces a compelling value proposition, and differentiation helps overcome competitive forces. Let me know if you disagree or if I’ve left anything out.

Jay Ehret wrote a good post on Starbucks "loyalty" programs. I say "loyalty" because, as Jay points out, most of these benefits - cards, free WIFI - are more of a pain in the java bean than anything else. I’m not a huge Starbucks fan, anyway, so reading Jay’s post won’t make me go to Starbucks any less (which is zero times a week). But, it did get me thinking about my coffee joint, why I go there and if B2C loyalty tactics can successfully be adapted to the B2B world.

Unlike Starbucks, the BeanTowne Coffee House has meanigful customer loyalty programs: buy ten coffees and I get one free, a drawing to win a free lunch after you buy ten coffees and free WIFI that just works. These benefits, along with a constant, friendly staff and good coffee, make the early morning choice easy. Now that’s the B2C world, where, it seems to me that customer loyalty programs are straight forward (if executed properly).

But, a lot of us live in the B2B world where, beyond providing great products and services, customer loyalty seems a little more complicated. So, have any of you adapted customer loyalty tactics of the B2C world to the B2B world? If so, What has worked brilliantly and what has failed miserably?

In April, I wrote a blog post on pricing microviews. The post discussed some University of Florida research that discovered consumers think of value in the least significant digit of price. The conclusion was that the more precisely an item is priced, the more likely a seller will realize what he or she is asking.

As a follow-up to this blog post, I’ll share some information on pricing anchors that I recently Stumbled Upon.

A blog post by Ankesh Kothari discusses the use of pricing anchors to persuade consumers to make a desired purchase decision. There are three anchor examples in the post (and it is worth the read), but I’ll only focus on one here.

According to Kothari’s blog, The Economist magazine offered three subscription choices: $59 web only, $125 print only, and $125 print and web. David Airey, a behavioral economist, was puzzled and decided to discover why The Economist offered two options at the same price. Airey found that if the print only option was removed the majority of a test group chose the lower priced, web only option. With the print only option in play, most of the same group went for the higher priced, print and web option.

Airey concluded that the print only option was offered to sell the higher priced, print and web option.

With a little forethought and purpose, consumers’ choices can be managed with the right pricing anchors. Thanks, Ankesh, for a great post.

How have you used pricing anchors to manage buying decisions?