The Science of Marketing

Recent data from Marketing Sherpa, and a recent post by Ardath Albee of Marketing Interactions peel back the curtain on one of the biggest misconceptions in e-mail marketing- people ignore or unsubscribe from your e-mails because their inboxes are just too crowded.  The reality, supported by Marketing Sherpa’s numbers, tells us a very different story- that quite often it’s not them, it’s you.

Yes, people are busy.  Yes, e-mail gets overwhelming.  But most business professionals still consider their inboxes a key driver for daily activities and decisions.  It seems the problem is not that valuable messages are being tuned out due to overload, but that irrelevant e-mails are being ignored because, well, they’re irrelevant. 

When I think about it, the marketing e-mails I delete or opt out of are the ones that have little or nothing to do with my priorities in life or my goals at work.  Sometimes I ignore them even if they are relevant, but not a priority in the moment.  When I’m trying to create value for clients during the work day, I probably won’t look at a list of vacation bargains.  When I’m planning a vacation at night, I probably won’t open a message on best practices in B2B marketing. 

My own behavior tells me that e-mail marketing activities have to be pretty relevant these days if they are going to be effective.  We better know our audiences, understand their interests, and if possible, factor in how time-of-day can affect our success.  And in case Ardath didn’t make it clear enough, we must do all that we can to segment our audiences and make sure that the subjects, content and assets of our e-mails are relevent to small groups with specific interests.

Yes, it’s indeed that time of year.  Around here – the leaves are slowly falling from the oaks, the mower deck is off and the snow blower is on the tractor, the golf clubs are in the basement (boo!) and budgets are due.

My fellow blogger, Todd, did a fantastic job discussing focus in the marketing budget process in his last blog post.  Now, I would like to take this one step further and pose the question: how do you know that your focus is on target?  Does it pass the red face test when your manager asks "is this going to do what we want it to do?"   This is especially important in the case of selling to multiple market segments.

Suppose you sell into four or five diverse market segments. Hopefully, you’ve been given a top down marketing budget number, one that is a percentage of projected revenues for the coming year.  You probably have an idea of how to allocate this budget across programs – AR/MR, events, web and collateral, direct mail/e-mail, advertising, etc.   But have you ever audited the marketing budget to align spend with expected revenue for each market segment?

I’ve developed a few budgets over the years in high tech B2B and while finance always has a bunch of fancy-schmancy accounting tools that can generate all manners of reports, I have always been frustrated by the lack of reporting that I would like to see. So, I created a simple scheme based on tried-and-true Microsoft Excel.

Allocate The Budget Across All Programs

List all the marketing programs and sub items in one column and put the estimated investment/what’s it going to cost in the next column.  The total of the second column should match the single marketing budget number you got from management.  You now have a high level view of programs, costs and total spend (aka, a budget).

Assign A Percentage Of Each Program To Each Segment

Now here’s the twist.  For each item, allocate percentage of the cost of each program to each segment (the total should be 100%, of course).  For example, if there is a targeted event, most likely one segment gets 100% allocation; if there is a slick corporate overview,  allocate its cost evenly across all segments.  From here you can estimate the marketing spend for each segment by summing the percentages allocated X program costs.

Compare To Target Revenues

Once you have the total allocated marketing budget for each segment, calculate the percentage of the total marketing budget for each.  Those percentages should closely match the percentage of predicted revenue for each segment.  For example, if you’re selling data solutions to the financial market and you expect 51% of your revenue to come from this segment, then 51% of your marketing budget should be targeted here.

While, this is no exact science, it’s an easy way to check your segments and see if your marketing dollars align with revenue goals.  If the marketing and revenue percentages are misaligned, you now have a process and method to modify your marketing budget.

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.  

Last week, I wrote about some basics of marketing strategy, and how segmentation, positioning and differentiation can improve the sales effort.  The comment that followed that post, from Ardath Albee of Marketing Interactions, got me thinking that I should be writing a bit more on the implementation of marketing strategy, especially in the tools and tactics we use most.  Since there are so many combinations of strategies and tactics, the Strategy in Action theme will probably take awhile to cover, so watch for the series to continue in future posts.  For now I’ll begin with segmentation on the web – how understanding and playing to our key audiences can make for more effective web marketing. 

In the B2B world, segmentation is a two-step process.  The first step is understanding the types of companies to which you are selling.  Are they large corporations or small businesses, what industries are they in, where are they located?  Once you come up with a profile (or more likely, several profiles) of the types of companies you are targeting, it is also important to segment the people inside of these companies who represent your audience.  This is often done by job title alone, but it is important to remember that we’re talking about people here, so it’s not a bad idea to note their age group, gender, education level and other personal details to the best of your ability.  We cover market segmentation in several other posts, so feel free to check them out here.  It’s also important to note that the other facets of marketing strategy – particularly positioning and differentiation – must also come into play on the web, but for now we’ll look at segmentation in a vacuum.

Self Identification

To me, the most important way that segmentation influences web marketing lies in how you structure your web site.  Companies such as Dell address different segments through self identification on their home page – asking users to specify whether they are looking for products for their home, office or data center.  Once a visitor selects a category, Dell’s web site presents only the products and promotions that appeal to their particular segment.  Pretty straightforward.  But this type of self identification breaks down as more and more visitors skip the home page and navigate directly to their content using a search engine.  For example, Google searches for "Dell laptop" and "Dell desktop" led me to product pages that offer home computers and back to school specials.  Not exactly what an enterprise IT manager is looking for.

Landing Page Optimization

To ensure that visitors can easily find the content that is right for their segment – even when entering through a search engine – try combining self identification with landing page optimization – creating "mini home pages" called landing pages for different segments, and owning the most popular search terms to funnel users to the content they seek.  Cisco has become a master of this technique, as a recent search for "Cisco router" shows.  By clicking the top result for that search, I was brought to a Cisco landing page that included the company’s top line message for their router line, a section on router basics, and simple, well organized product links for their branch, WAN, and service provider routers.  There is a bit of segmentation in each of these categories, and the rest is handled through tailored messages on the individual product pages.  Cisco’s approach allows the company to talk to each segment individually, while quickly getting users to the right content.

Content Creation

Beyond structure, segmentation comes into play on the web through the content itself.  By understanding who you’re writing for, you can improve the relevance of your content and tailor calls to action for different audiences.  Once a web site is structured to bring each segment to its own unique place, you can organize and present content that engages each audience on their own terms.  This is where it helps to understand not only the types of companies, but the types of people to whom you’re talking.

As I type and type, I realize I could probably go on all day about segmentation on the web.  But there’s work to do, and golf balls to lose, so for now, I’ll toss it back to you to tell me what I left out.

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.

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?

Every now and then, it’s fun to take a walk down memory lane.  So today, I logged into Google Analytics and punched up the content page to find out what our ten most popular posts are.  I was surprised at how diverse the list is, ranging from the very tactical to the very strategic, and covering just about every topic we’ve ever written about.  I’m glad to see that our readers enjoy variety, so we’ll continue to mix things up.  If there’s anything you’d like us to write about, please comment below or send us an e-mail – we’d love to hear from you.

With that, Our Ten Most Popular Posts: 

1. Internal Communications: Own It
2. The Blogosphere: You Don’t Have to Blog to Belong
3. Mission Statement: Make it Possible
4. Slogans: Say What You Do
5. Market Segmentation: How to Prioritize Targets
6. High Tech Blogging: Why?
7. Lead Generation: The Bell Curve
8. Communications Part II: To the Right People
9. Age of Conversation 2: The Deadline
10. The SEO Triple Play: Message, Mechanics, Maintenance

Once a company has segmented its target markets and positioned itself in context of the business issues and market requirements its customers care about, it is important to conduct a differentiation exercise to examine how its offerings stack up to those of its chief competitors. Understanding a company’s differentiation means knowing the areas in which it excels, as well as those where it may be vulnerable against a particular competitor. Armed with this information, the company can be prepared to attack its competitors’ weaknesses, while defending against their strengths.

Read the rest of this entry »

In a recent post, Ardath Albee describes how to score leads based on activity (e.g., download a white paper, web activity). This is an important part of database marketing and gives your sales and marketing team actionable intelligence on what products and services are of most interest to potential customers. In the world of high tech, where you often have a new technology, a large target list, and little activity intel, how to you prioritize your target list to make efficient use of a finite sales resource? Enter the Opportunity Index – a methodology to effectively segment a market with measurable attributes that best match prospects’ needs with a company’s solution.

Read the rest of this entry »