Recent data from Marketing Sherpa

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.

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.

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. 

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 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.

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.

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?

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

While positioning typically links business drivers to market requirements and solution benefits, differentiation involves a deeper dive into the specific features and attributes that address its customers’ needs. Each feature should map directly to one of the market requirements identified in positioning (if it doesn’t, either the feature is not a major differentiator or the positioning needs to be adjusted). Once the feature list has been identified, it is time to begin collecting data on each competitor and assembling a differentiation matrix that compares the company’s features to those of each competitor. An example of a differentiation matrix for Fireweed Inc., a fictitious switching company, is depicted below.

With a comprehensive understanding of exactly how its products compare to those of its competitors, a company can better leverage its strengths and manage its weaknesses across several disciplines. For example, the marketing department can promote the known strengths of its product offering, the sales force can be prepared to handle objections based on certain solution weaknesses, and the development team can identify the “must have” product features that will help the company compete more effectively.

While positioning is extremely important in early markets, where there are few direct competitors but many alternative solutions, differentiation can be even more essential in well developed markets, where competitors abound. The key to successful differentiation lies in understanding the dynamics of the market a company is selling into, identifying the specific features that its customers require, and consistently comparing its product attributes to those of the competition.

Many high tech companies have embraced database marketing as a means of increasing the efficiency of their sales efforts. Most of these efforts start with a goal of using relevant weighted metrics, or attributes, to prioritize target prospects and increase odds of success. In other words, solid segmentation begins with an Opportunity Index.

There are three steps (and a lot of thinking) involved in creating an Opportunity Index.

1. Create, Index and Weight Attributes

The first step in creating an opportunity index is to create the attributes – characteristics of targets that have relevance to your solution. Indexing is the segmentation of an attribute into ranges that are assigned a number, say 1-5, the higher the number the better fit to your solution. Weighting is a way to assign relative importance of each attribute to your company’s solution. Weights are usually assigned in the range of 0-1 in 0.1 increments, where 1 represents the highest weighting. The goal of creating, indexing and weighting attributes is to set a foundation for objectively analyzing raw data.

To see how this works, consider the fictitious Smart Check RFID company, OG Corporation, that we used in a blog post earlier this year. The OG Corporation sells gaming chips with embedded RFID technology to casinos. These systems help casinos reduce fraud loss and broaden their base of loyalty programs by tracking the betting tendencies of customers. The OG Corporation has determined that there are three critical success metrics in the sale of their system to casinos.

• Fraud Loss – the more casinos lose from fraud, the more likely they are to be interested in Smart Check.

• Dominant Clientele – OG has segmented casino patrons into three categories: whales (high rollers who are already comped and have personal attention), casual high rollers ($100 a hand players who are off casinos’ radars), and low rollers (people who play penny slots). OG has determined that casinos who predominantly cater to casual high rollers will be most interested in Smart Check as a way of cultivating customer loyalty in this group.

• Rerack Timeframe – casinos rerack (replace their chips) periodically and after compromising events. A near-term reracking is a key opportunity for OG’s Smart Check system.

In addition, OG has determined that Rerack Timeframe is the most important attribute and has assigned it a weighting of 1.0. Fraud loss and Dominant Clientele are less important and assigned weightings of 0.8 and 0.5, respectively.

The attribute indexing and weighting would look like this.

Note that if you can’t obtain the raw data needed to index, don’t define an attribute for it.

2. Gather the Raw Data

The raw data is the actual value of the attributes for each targets. The only challenge is collecting the data (see the note above).

The raw attribute data for three target casinos (fictitiously named O’Patrick’s, Belugio and Fantasy Island) looks like this.

Of course, if there were only three targets, the OG Corporation wouldn’t need an opportunity index; it would just assign all three casinos to one or two sales executives (and probably also go out of business). An Opportunity Index is really useful for a large number of targets as a way to focus the sales team.

3. Convert Data to Target Rankings

The last step in creating an Opportunity Index requires simple math (and a spreadsheet makes it easy). Each of the raw data is converted to its corresponding index value and multiplied by the attribute rating, as defined in step 1. The Opportunity Index is then calculated by summing the weighted index values for each casino. This has been done below for the raw data in step 2 and the target casinos have been ranked from the most to the least promising prospect. Now marketing can direct the sales team to spend resources hunting O’Patrick’s and Fantasy Island while leaving Belugio for later.

One of the keys to useful Opportunity Indices is maintenance. Are the attributes indexed correctly? Are the weightings reflective of the sales team’s experience? Is there an important attribute that has been overlooked? But, in the end, if you have confidence in your assumptions and believe the data, Opportunity Indexing can inject a little science into your sales process and set you on the path to world-class database marketing.