There is an old joke about economists that goes, “If you have six economists in a room, you will have 7 opinions.”  Recognizing this phenomenon, the Associated Press seeks to derive a consensus by surveying up to 50 economists on a quarterly basis. The most recent report suggests that economic growth for the next 12 months will be relatively low, and that unemployment will remain where it is today.  Significant factors in developing this prognostication are the continued high unemployment, State budget shortfalls, European debt situation, and the weak housing market.

On the positive side, the economists think that we are growing, i.e., that the recession has ended, and reports show that Americans are saving more than they have in the recent past.

Good information, but how does this relate to the CMO or Product Management struggling with making the year and forecasting 2011?

First is the necessity to face reality.  Unless you have a game changing product like an iPhone, it is unlikely that you will see double-digit growth.  High single digit projections should be viewed as the optimistic forecast.

Second, Marketing budgets will be flat to down over the period.  The 2008 guidance, “You will have to make do with less” will come back or be reinforced.  For the CMO this means expanding on those tools and tactics that work, ruthlessly cutting those that don’t and exploring new, lower cost ways of reaching potential customers.

Third, your customer base is the lowest cost way to generate new and/or incremental sales.  Add-on features, new services, and related products should all be developed and directed to the customer base.

Fourth, product differentiation and market segmentation have to be foremost in all product development activity.  The more that you can differentiate your product, to the key target market segments, the more you insulate yourself from price competition and commoditization of your product/services.

Fifth, if you have not done so, now is the time to reduce the number of products and services that you offer to only a few.  Sunsetting products is never easy and is often emotional as the different stakeholders (Sales, Management, Key Customers) weigh in.  But, reducing the number of products and focusing on the key ones has the potential to reduce costs and increase profitability.

Like the economist’s opinions, these suggestions are at a high level. Every company is different and will embrace different tactics.  The key to remember is that it appears that for the next 12-18 months economic growth will be slow, and to act accordingly.

How are you integrating macro economic forecasts in your planning for the balance of 2010 and 2011?

RHM  7/29/2010

In business to business markets, I am often asked which is best to focus on, advertising or personal (relationship) selling.

Before I answer the question, let’s look at what functions each perform and then draw a conclusion.

Assuming your enterprise has a direct sales force, it performs many functions such as; relationships, promoting your company, finding customers, closing orders, etc. An additional function that is performed by sales people is creating a personalized awareness with their customers.  Two major issues a sales team cannot do effectively is create wide-spread awareness and be the most cost effective.

Advertising can be used for different objectives. The primary objectives of advertising are creating awareness, branding, and providing information about your company and /or products.  It has been proven that advertising increases sales efficiency by providing awareness or helping turn a cold call into a warm sales call.  On the other side of the equation, advertising is not a substitute for personal selling or creating product preference.  These require a sales person to be “real time” and demonstrate or explain the value propositions to a potential customer.

So which is best?  The answer is not which channel is the best but that advertising and personal selling support each other and thus, picking the correct mix and integrating from a marketing communication strategy is really the key.  Of course the mix will contain more than just personal selling and advertising but other marketing tools as well.  The real challenge is developing a complete marketing plan that maximizes the  communication tools, supports the overall goals and falls within the marketing budget.

So the keys are: 

-Develop an overall marketing strategy and implementation plan

-Structure the mix to include your sales team

-Make sure things like messaging and value propositions are in sync between advertising and the sales force.

-Establish the budget that supports the overall game plan

RHL 7/27/10

Pricing is one the four “P’s” of Marketing.  The right price drives margin, profit, and to some degree perception of the product.  But it appears that a fixed price is rapidly going the way of the buggy whip.  If this is true, has the CMO lost one of his key tools?

It is an axiom among hi-tech buyers that negotiating a price in the last week of the quarter will result in a cost savings over the “quoted” or “regular” price.  Whether the cost savings are a lower price or are expressed as additional features at no cost, extended warranties or something similar, the result is the same…lower margin for the seller.

On the other side many Sales Managers, backed by Management, tell their sales force, “Don’t let price get in the way of closing a sale!”  This is communicated to the buyer, either directly or indirectly, again resulting in a pricing concession and lower margins.

The offline and online business press has been buzzing about deflation, often drawing parallels to the Japanese experience of the past 15 years.  In a deflationary environment, buyers wait to the last minute to make their buying decision, and then seek the lowest price for a product that meets their needs.  Sellers, with inventory on hand or needing to meet a goal, recognize that something is better than nothing and compete for the business based on price.  After repetitive downward rounds marginal vendors go out of business, leaving larger players who are still forced to compete on price.

Assuming that deflationary pricing is a fact of life through 2011, how should a B2B CMO price his/her product?  Some suggestions are:

1. Emphasize the value proposition of the product/service to the buyer, highlighting the unique differentiating features that will save the buyer time and money, allowing him to be more profitable using your product.  This can be communicated via:
   1. Use cases
   2. Testimonials
   3. Blogs/Tweets
2. Motivate the sales force and buyers to make a decision earlier, thereby blocking out competition.  If there is tacit acknowledgement that closing the sale in the last week of the quarter results in a 5% price reduction, offer those monies as an incentive to close the deal earlier in the quarter.
3. Increase the price of add-ons and service.  If these are normally “thrown-in” in order to close the deal, make their perceived value higher so that fewer concessions have to be made to show a price reduction.
4. Provide an estimated ROI based on purchasing the product.
5. Modify the financial terms of the deal; lower payments for the first six months, lower interest rates, lower cost service contract, etc.
6. Lower your costs by working with Management and purchasing to ensure that your margins remain constant under the downward pressure.

There are other tactics that can be applied, depending upon each company’s specific situation, i.e., price leader, price follower, etc.

Can you share how you are planning to price your products in a deflationary environment?

RHM  7/22/2010

Like everything else in this world, there are often multiple choices that can be made. Selecting a sales channel is no different. I have listed below the more popular sales channels and a very high level advantage and disadvantage of each.

My article on the Always-On culture elicited some comments about Nicholas Carr’s new book “The Shallows.”  The July 4^th weekend provided a great opportunity to read and contemplate Mr. Carr’s work.

Basically he feels that the Internet, while providing us with unlimited information, is making us stupid.  He is referring to Internet users growing inability to concentrate, focus and contemplate on a subject for a long period of time.  He cites numerous examples of why “deep” thinking is required and how multi-tasking doesn’t work.  In short, knowing where to find information doesn’t mean that we “know” that information.

Equally disturbing is the concept that computer aided “intelligence” will become the judge and standard setter for humans.  As an example he cites the emergence of a computer program that will be able to analyze and judge written essays – the type used for college admissions.  Since the program will follow established rules, higher rankings will apply to those who adhere to rules the most.  Innovative, creative people need not apply.

Mr. Carr often refers to HAL, the computer in the 1968 movie 2001: A Space Odyssey who thinks that he is more intelligent than humans, misbehaves, and is ultimately shut-down by the humans.  Mr. Carr’s fear is that we will become so associated with the computer (Internet) that we won’t be able to shut it down.

One of the reviewers of The Shallows equated it to Rachel Carson’s book, The Silent Spring where she highlighted the issue of DDT usage and its impact on the environment, especially the bird population.  This reviewer is correct. The Shallows is a must read for anyone using the Internet, in order for them to understand the personal and emotional risks that go along with intense continued usage, as well as the long term implications to our society.

It is interesting to note that others are beginning to express similar concerns.  Two recent articles are:

• Alex Beam’s column in this morning’s Boston Globe, titled @Prince I (Heart) You
• Breaking the Email Addiction, by Tony Schwartz in The Harvard Business Review, 6/29/2010.

The implications to Marketers relating to the issues Mr. Carr raises are significant.  If, as he suggests, our brains adapt to external stimuli, then a whole new set of interrupt driven, attention grabbing sight and sound occurrences can be expected.  If there is retreat or moderation in Internet usage, a reversion to old practices or a combination of old and new practices may occur.

Seeing that it is important to be unplugged for a while, and that our brains need to be exercised in different ways, I am making it a point to read at least one book a week.

Read The Shallows and tell me what you are doing to make sure that your brain doesn’t become an extension of the Internet, and as Marketers how you interpret Mr. Carr’s thesis.

RHM  7/13/2010

Last week Ralph Grabowski presented at the monthly BPMA meeting.  The title of his presentation “Tools to Convince Management of Your Investment in the Voice of the Customer” inadequately described his message – that Marketing expenditures should exceed Engineering expenditures by 2.5:1 or more!

Given the technology focus of Boston area companies, with a high concentration of hi-tech, bio-pharma, and green oriented companies this statement might be viewed as heresy and unbelievable.

However, Ralph is an MIT educated engineer and has real world examples to back up his claim, both for success and failures.  The data can be found on his web site:  http://www.marketingvp.com/index.html

What I especially like is his definition of what he includes in Marketing:

• budgeting the resources and time – the Marketing/Engineering Investment Ratio™
• conducting primary and secondary market research
• developing strategy
• articulating the value of the technology
• understanding the potential customer
• modeling both the customer’s business, and your own
• calculating customer payback
• quantifying customer needs
• specifying the product – guiding engineering
• thinking through the “6 P’s and a D”

• questioning and surveying the customer
• analyzing and reporting customer survey data
• segmenting the market
• sizing the market
• scrutinizing the food chain
• creating channels of distribution
• surfacing competitive intelligence
• developing an unfair, defensible, and decisive competitive advantage

• realizing value from intellectual property through patents and technology licensing
• building strategic alliances
• guiding promotion motion
• guiding selling motion
• guiding support
• steering the enterprise

In short, all the tasks that fall to a Product Manager in developing and delivering a product to the market place.

In our discussions with hi-tech B2B companies in the Boston area, we have observed Marketing departments which are still staffed at levels 50% below where they were in 2008, while Engineering and R&D are down 10-15%.  At the same time, Management is turning to Marketing and asking for increased leads, new product launches and increased market share.

Suggestion – review Ralph’s work.  Discount it by 50% (i.e. Marketing expenditures, not including promotion and selling, should be 1.25% higher than engineering expenditures) to reflect the 2010 environment and just to be cynical.   Compare it to the ratio of Marketing expenses (less promotion and selling) to Engineering/Development expenses in your company.  Then look at the company goals for 2010 and 2011.  Are they in-line or is more investment in Marketing required?

If they are out of line, do you have a plan of action aimed at resolving this?  And no, cutting Engineering/Development expenses is not an option.

Shameless Plug: Fire Alarm Marketing offers a Marketing Health Check which covers the points that Ralph makes as well as a company’s overall strategy.  You can get the details here:  http://firealarmmarketing.com/marketing-programs/marketing-health-check/

RHM  6/24/2010

This is the first in a series of posts about planning for 2011.

Many years ago, when I worked for GE’s Audio Electronics Products Department, planning was a major part of a Product Manager’s work.  The planning started about this time of the year and was focused on the “5 Year Plan” that every GE Product Department had to submit.  Primary emphasis was given to the first year of the 5 year plan, as that became the basis for the “Annual Plan” which was submitted in the fall, and then went through several iterations.  Most companies today follow a similar, but probably not so detailed process.  And remember this was before PCs and laptops; Excel spread sheets and the Internet.

The first step was to identify trends, ranging from macro to micro.  On the macro side, what was the economy doing, what was the forecast, was it an election year (this did make a difference!), what was the exchange rate and what was the arbitrage spread, etc. etc. The objective was to lay a foundation and correlation, as we had access to historical industry information that grossly correlated with some of major economic indicators.

This was then followed up by more detailed demographic information.  Who was buying which products, why, were any products or combination of products surging ahead of the others, to whom and why?  For example, small ‘transistor” radios were popular with teenagers.

Next came a competitive review.  What was the status of the competition, were there new competitors, new competitive winning products, new distribution channels, etc.?

Following this was an internal examination of our products.  Which ones were winners, which were losers, which had the highest profit margin, lowest, etc.?

Critical to this planning was the early identification of trends that would impact our business.  Connecting the “dots” became a mixture of art and science, as what we were selling was purchased out of disposable income.  But, even if that went down, the products were great gift items, with peaks around Christmas, Father’s Day, Graduation, etc.

The same process that allowed GE’s AEPD to succeed is applicable today to both consumer and B2B companies.  As the CMO going into your 2011 planning cycle, you should be asking and finding the answer to these questions:

• How strong a correlation exists between the purchase decision for your product(s) and the economy?  Note that if there is no correlation, your messaging better be focused on providing a high degree of pleasure (for consumer goods) or cost savings/ROI (B2B).
• Who makes the decision to buy your product(s) and has there been any change?  Has a self-purchase migrated to a family purchase; has a committee replaced a purchasing agent?
• Has there been any change in the way the buyers of your product(s) learn about them?  How effective has your promotional mix been?  Should it remain the same, or change?  (This is where an evaluation of social media comes in.)
• Has there been any change in sales in your current product line, i.e., price erosion on Product XXX, higher volume on the lowest cost, minimal featured product, or user demand shifting to s a particular “must have” feature?
• What changes have occurred regarding your competition?  Have any increased their market share?  Have any gone out of business?  Are there new (or indications of new) models and/or features being introduced?  Do any of the competitors appear to have locked up a specific segment, vertical market, or distribution channel?
• What is the status of your products and product development?  Should you be planning new launches or cost improvements?  What features/functions will continue your differentiation, which ones need to be added to remain competitive? Is this doable in the next 6 months?

An example of the outcome of this type of planning was the decision one year to cost-reduce the highest volume cash cow product (400K+ units), rather than replace it with a new one, knowing that the market was shifting to a different format.

Now is the time to begin asking and answering these questions.  For most companies, what is going to happen in June is set and done.  The third quarter revolves around September, and for Marketing, doing this type of planning and analysis in September usually conflicts with the tactical need to make the quarter.  Where you don’t want to be is sitting around a table in the first week of October asking, “Well, we have visibility into 2010, what are we going to do next year?

Have you begun your planning process yet?  Can you identify the major macro and micro trends in your industry that impact your company?

Related:

http://firealarmmarketing.com/2010/04/01/2010-the-first-milestone/

http://firealarmmarketing.com/2009/10/29/guide-for-the-cmo-in-planning-2010/

http://firealarmmarketing.com/2009/10/22/the-only-metric-to-use-in-2010-planning/

RHM  6/17/2010

A marketing person has many tools at his disposal for generating awareness and supporting the selling effort.  While there are numerous marketing communication tools, there are also numerous mixes for these tools. The following is a list of some of the more common tools along with examples of their use and some considerations. One important note is remember that marketing communication tools do improve understanding your product or service, reinforcing your messages, supporting the sales cycle and generating awareness.

1-      Advertising: Advertising’s main feature is increasing awareness.   An example of an ad might be an enterprise promoting that it is number one in providing top quality lawn mowers. Ads also help promote your product or service and branding for your enterprise.   Major advice regarding advertising is to very clear about its objective, who is the audience and how will you measure its effectiveness.

One major mistake that many companies make is that after doing an excellent job of determining the objectives, defining audience and establishing metrics, is that they do not fund the advertising plan so that it will be effective.  All too many times after an ad campaign starts they stop funding it because they do not see any positive results.  Typically ad programs have a “threshold” or how many times it must run to be effective, but many companies stop part of the way through and move on to something else.  Rule number one; do not run any ads unless you are funded for the full program!

2-      Direct mail or email campaigns: The primary purpose of mailings, direct or email, is to generate leads, via some form of an offer or call to action. An example of a direct mail might be a message that addresses the need for additional revenues and implementing a marketing program that will result in additional revenues.  Mailings can also be used for promoting any major communication messages.  Like advertising, first make sure you know your objective and have a targeted audience and how you will measure the campaign.  Word of caution, mailings do not usually replace the sales force (I am addressing business to business markets). But as stated, they provide leads or names of potential customers.  The biggest mistakes most companies make are; the offer does not line up with the targeted audience, the offer is not compelling. and a lack of a call to action. If you do not address these issues you are only “clicks” away from losing your potential customer.

3-      Social Media:  Social Media’s main purpose is providing “information” about your products, services, and enterprise, and other people’s opinions about all three. As Bob has discussed in a number of articles, social media is not only growing at a rapid rate, it is becoming a resource for consumer/buyers to research the potential product or service way before your enterprise is even aware of the buyer’s interest.  Key advice here is to at least monitor these activities, respond to viewer’s comments, especially if there is bad publicity.  Common mistakes are not engaging in one form of these activities, becoming defensive about social remarks and not gathering this information for future products or services.

4-      Trade shows, seminars, webinars: These tools can address many issues, but usually their primary objectives are leads and a product/service introduction or announcement. An example might be “Visit our booth #1234 and see the industry’s fastest switch”.   Two of the biggest mistakes are not getting the leads out to the field in a timely manner and having a very strong message that is easy to understand.

5-      Newsletters, Catalogs: Primary use is for convening information, be it some form of an update or similar to the trade show, an announcement of a new product or service.   Key for success for these is attention getting and true value proposition.

Understand there are numerous marketing tools and even more  when you make different mixes, and I have just highlighted just 5.  Regardless of the tools you use or what combinations, remember that you must have an objective, a well defined audience, an agreed method of measurement and most importantly, adequate funds for each program/campaign.  The key to a successful use of these marketing tools is to coordinate these activities with the sales organization (give them plenty of notice ahead of time) and other distribution channels.

RHL 06/15/10

Top tips for leveraging LinkedIn to generate sales
By: Craig James

A guest post by Craig James,  a leader in the use of social networks in generating sales.

By now, most of us have dabbled in one or more forms of social media, with varying degrees of gusto, and different degrees of success. In fact, many of us aren’t sure what “success” means; we’re still unsure of the merits of social media, or how to take full advantage of what’s available. Frankly, it can be overwhelming.

However, it can’t be denied that social media—Linkedin in particular—can help you generate more revenue. LinkedIn, unlike sites such as Facebook and MySpace, tends to attract people who want to develop business relationships, as opposed to friendships. But while many of us are familiar with the basic features of LinkedIn, we don’t always know how to best leverage them to drive sales. And because LinkedIn and its members rightfully frown upon solicitations for business (pitches), many have discounted its value as a useful sales tool. In fact, LinkedIn provides a multitude of ways for you to both develop and nurture relationships, which can lead directly to sales opportunities, and allows you to position yourself as a thought leader and a valuable resource who prospects will come to, without your having to “sell” them.

Get and give recommendations
What impression do you suppose a prospect will have after reading glowing endorsements about you from former coworkers, bosses, and, especially, clients? While they may suspect those clients likely did not volunteer to write those recommendations, they also know that clients would not agree to do so if they did not feel comfortable legitimately endorsing you. What’s the most tactful way to get a recommendation? Write one for someone else. Doing so accomplishes three things: one, it clearly flatters the person you write it for; two, it helps him or her look better to people viewing his or her profile; and three, it creates a desire to reciprocate.

Conduct Polls
People like giving their opinion about issues that are relevant or important to them. Every so often (once a quarter or so) use LinkedIn’s polling feature to take a poll. Your name appears (once again), reminding your connections you’re out there, and in so doing, keeping you top of mind. While having participated in a poll is not in and of itself likely to get someone in your network to buy what you’re selling, when combined with all your other LinkedIn activities, it will increase the likelihood you’ll be contacted when a need does arise for what you sell.

Read news
Each group has a news section that contains news articles other members post, and increasingly, blog entries. You never know what interesting tidbit you might come across that the difficult-to-reach prospect would appreciate receiving (and reward you for sending with a return call).

Contribute to discussions
Adding your experienced-based comments to existing discussions in the groups to which your clients and prospects belong is an unobtrusive, but powerful, way to demonstrate your thought leadership and your willingness and ability to provide value.

For example, I contributed to a discussion in one of the Mergers and Acquisitions groups. The very next day, I received an email from a boutique M&A firm on Long Island saying they “would like to learn more about [my] firm and services as they may be beneficial to [his] prospects and client base.”

Post documents, presentations, share what you’re reading
While you may not sell people on LinkedIn, your marketing material may. Use LinkedIn Applications such as SlideShare Presentations, Google Presentations, Box. net Files, and Reading List to passively communicate about your company and yourself. I’ve used this to post my standard sales presentation, which promotes what I offer, and a couple of books I’ve read and recommend. This helps others get to know me better as a person, effectively building my personal brand. Others use it to establish thought leadership by posting white papers their firms have authored.

In addition to these ideas, there are a few I’d like to share courtesy of a fellow business owner. David Leaver of Opus Partners recommends that his clients identify some trigger events—events that, when they occur, will create a need for a product one sells—among the weekly updates mentioned above. For Leaver, who provides sales training services, one trigger is when a VP of Sales changes jobs, since often times, he or she will want to bring in a sales consultant to evaluate the staff being inherited.

Better Targeting
Premium LinkedIn users have a host of additional benefits that are beyond the scope of this article. One that I’ve found extremely valuable is the ability to search for contacts using premium-only demographic criteria, such as company size, function, and seniority level. This provides me with a reduced, and more targeted, list of prospects, enabling me to zero in on the exact person or persons I want to reach, in the size of organization I want. I can then send a custom, targeted message to those prospects via InMail, or, if I don’t have a premium account, via a connection.

As we have seen, there are a plethora of easy-to-use tools available to you on LinkedIn that can help you improve your sales results. Start by picking one or two, and use them for about a week, until they become second nature. (Nigel Edelshain of Sales 2.0 disciplines himself to devote 15 to 30 minutes each and every day.) Then, gradually start using the rest of the features presented here, until you find yourself becoming a bona fide LinkedIn maestro.

Resources

• Three Ways to Link Your Company to LinkedIn
• Control Social Media Mayhem
• What I Learned About Link Backs

Author Information:

Craig James is the founder of Sales Solutions, a sales productivity improvement business located in suburban Boston. He can be reached toll-free at 877-862-8631, or by e-mail at craig@sales-solutions.biz.

Earlier this week I was in a meeting where the conversation turned to behavior in meetings by attendees. In part, the conversation evolved from a recent article in the NY Times that highlights the issues about multi-tasking.  This article, along with others, reinforces the belief that multi-taskers cannot and do not do things as well as those who focus on the job at hand.

The discussion started on whether it is appropriate for those attending to use electronic devices (laptops, notebooks, blackberries, etc.) during the meeting.  Some felt it is disrespectful to the presenter, while others said that the devices were acceptable, based on the culture of the company or if being used to take notes.

One suggestion was to ban the devices, offsetting the ban by holding shorter meetings that follow a set agenda.  This was countered by those that hold project management type meetings where different constituencies need to be heard and that such meetings inevitably take time.

Most conferences that I attend have a hashtag, and attendees are tweeting about the meeting, presenter and weather during the course of the meeting, either using their computers or smart phones.  Obviously in these meetings, the organizers have decided that promotion on twitter is more important than focused attention on the presenters or panel.

So, on one side there are those feel that during a meeting the presenter or chair should get undivided attention, while others say that the culture requires immediate access, whether it be from their management or their need to access the Internet.

Another element that has crept into today’s meetings and conferences is the “back-channel” communication provided by the electronic devices.   Meeting attendees have been known to make comments about the presenter or other attendees, thru texting, email, or twittering, resulting in inappropriate smirks or giggles…comments which are oblivious the other attendees who are not part of the electronic group.

A conclusion that can be derived from today’s behavior is that you, whether chairing a meeting or presenting to a group, will rarely have the undivided attention of the audience.  Recognizing this beforehand, the key concepts that have been drummed into you are worth repeating:

For Marketing/Sales people:

• Tell them what you are going to tell them
• Tell them
• Tell them what you told them
• Keep it short
• Keep it simple
• Ask for the order
• Recognize that you will probably have to come back to do it again.

For those running a meeting:

• Follow a set agenda
• Never let a meeting go for more than a hour without a break
• Recognize that you are going to have to cover fewer things, and probably repetitively because attendees will not get it the first time.

The current “always-on” workplace seems to be counter-productive, driven by distraction and the inability to focus on work.  I hope I don’t appear as a Luddite, but my recommendation would be to manage the distractions to a minimum in order to improve productivity.

Your thoughts?

RHM  5/10/2020