One definition of a sales channel is that “it is the pipe through which a producer’s product flows to the user.”  Like all pipes it can be straight, crooked or have many branches.  And reflecting today’s new technologies the pipe can have a flow of information in two directions.

Which channel is best for your business?  As with all such broad questions the immediate answer is “It depends.”  It depends on how your customer wants to buy, the price and complexity of your product, the length of the buying cycle and a myriad of other intertwined elements.

The most common channels today are:

·         Direct, where a company’s sales people interact directly with the buyers

·         Indirect, where a company sells to distributers, who in turn sell to either other distributors or buyers

·         On-line, where the buyer contacts the company directly over the Internet

And, once a company decides on its main distribution channel, secondary or alternative channels often spring up.  Managing the relationships that arise due to multiple channels of distribution is a difficult and time consuming process. The failure to pick the right channel can result in business failure, as key buyers are missed and competitors swoop in and win sales.

Sales channels or Distribution is one of the classic “4 P’s” (Product, Place, Promotion, Price) of Marketing.  On May 3rd, Dick Lush and I will be discussing Sales Channels at 2:30 in Platform A at the Rhode Island Business Exchange (RIBX), and look forward to answering any questions you may have.

You can find out more information about RIBX, other speakers, directions, etc. here:  http://http.ribx.wordpress.com/.

RHM 

4/24/2012

A recent conversation with a potential client (PC) went something like this:

(PC)  “I need someone to develop a white paper on our new product that can be used to fulfill the offer in our upcoming email program.  The content will also be used in a brochure that we plan to hand out at the annual trade show, and can be used in a direct mail campaign.”

(FAM)  “That’s great.  It sounds as though you have thought this through.  One question, why are you doing this?”

(PC) “Huh?  This is the way we generate leads.”

(FAM)  OK, let me ask some questions before we get started, relating to your desire to generate leads:

·         Who is your target market?

·         What have been your results in the past 12 months in reaching them?

·         How is your product significantly different from the competition in solving the problems in your target market?

·         What is the “normal” open and conversion rate for your emails?

·         What has been your return for trade show activities?

·         What have been the results of your direct mail programs in the past?

·         Etc.

(PC)  Gee, you don’t understand me do you?  We just want somebody to deliver a white paper, not ask questions about us.  We know what we are doing, and want you to deliver the documents requested.

(FAM)  Thank you for considering us.

This exchange represents a mindset that is common today, i.e., people who are employed on a contract or temporary basis are expected to deliver a specific item which is then to be used by the contracting firm as they see fit.  The “contractors” are not expected to understand the broad picture or strategic plan of how and where their effort fits.

The result is that the worker provides what he/she thinks is needed, based on conversations, reading and observation of the product/service/company.  The buyer gets the work product and is often dissatisfied, complaining that when they had their own marcom, copywriter, designer, etc. the work product was better.

Experience has shown that the longer a “contractor” works with a company, the better the work product.  Generally this is because the “contractor” learns and understands over time, the strategy, plans and objectives of the company.

Companies seeking help on a short-term basis should follow two simple rules:

1.      Over communicate with contract workers.  Share with them what you are doing, planning and where you want to go.  The probability of them running across the street to your competitor with your intellectual property is low.  In short, make them part of your team.

2.      If you have even partial success with a contractor, keep him/her, train him/her about your company and culture and give them more to do.  Until a requisition is open for a full time position, keeping a person for an extended time is your best bet.

Our experience is that the more companies share with us, the more and better work we deliver; that while we market ourselves as “consultants” we do provide deliverables, and the more we know about our clients the better we can meet their needs.

If you have personal experiences in this area, chime in.

RHM 

4/17/201  

In January the Corporate Executive Board presented the findings of a survey:

We recently surveyed over 1900 customers to uncover insight regarding B2B purchasing behavior.  The survey results were surprising:  On average (and with little variation among industries) customers will contact a Sales rep when they independently completed about 60% of the purchasing decision process.

They go on to define the “60% purchasing decision process” as a gap in the middle of the sales funnel, caused by buyers gaining their own information about a product/service.  Where do customers get information?  Your web site, user groups, trade shows, word-of-mouth, past experiences and impressions, etc.

The concern for the B2B CMO is managing and controlling this information.  First, is control possible?  The answer is YES.  Is it possible to the extent that you would like…probably NO.

Acknowledging that the power has shifted to the buyer, the B2B CMO has to ensure the following:

·  That the corporate messaging is clear.

·  That for each product/service the significant differentiators  (value propositions) are clear and unambiguous.

·  That it is easy for a potential buyer to “position” the company’s product/service in the competitive array.

·  That the reputation of the company conveys:

o   Easy to work with

o   Above board

o   Meets commitments

Achieving these goals is a consuming task, requiring a continual review of internal and external communications, as well as “listening” and responding to comments made on social media. It also requires a unified approach across the company, from the management level to each and every person having contact with a customer.

In short, today’s B2B CMO is more like an orchestra conductor than an out-in-front platoon leader.  He/she is coordinating the different sections of the orchestra to play the same tune, at the same rhythm, focusing the music on the customer (audience) so that is both pleasing and enticing.  In addition, he/she must incorporate new “instruments” like LinkedIn, twitter, Facebook, Pinterest into the established orchestra of direct mail, trade shows and other outbound programs.

Failing to achieve coordination, the music (and message) will strike a sour note…suggesting to the buyer that he/she should move on to a more “harmonious” company.

In the slow growth out of the Great Recession many B2B buyers are moving with caution in making investment decisions.  Firms that project and convey harmony are well received.  Those that appear discordant are dismissed.

Is everyone in your organization singing the same tune?  When was the last time you checked?  Did you check by asking your customers and/or through lost sales reports?

RHM 2/28/2012

That the “Occupy” movement has gained visibility and traction over the past few weeks is an interesting commentary on our times.  The demographic studies done a few days ago as to who is part of the group seems to dispel the myth that they are white suburban hippy want-a-be’s.  What is clear at this point is that the group is dissatisfied with any one of the following:

• Lack of jobs and/or unemployment
• Student loans
• Mortgage rates/foreclosures/loss of housing
• Wall Street players making inordinate amounts of money
• The demise of the American dream that if you work hard, you will be rewarded
• The inability of elected officials to act positively

My interpretation of this social upheaval and dissatisfaction is less nuanced.   I believe that the average American is born with a fundamental sense of Fair Play.  We intuitively know when something is right and when something is wrong.  The “Occupy” people are expressing this feeling that something is not fair and is wrong, and they want it to be made right.  This does not mean that they want hand-outs, or a more socialistic society, or stronger government intervention.  They want things to be more in balance and more equitable.  (An example of the inequality can be found in this NY Times chart: http://www.nytimes.com/interactive/2011/10/26/nyregion/the-new-gilded-age.html?ref=politics)

What does this mean to Marketers?  Dick and I have written before about “under-promising and over-delivering” and the need to exceed expectations.  If my assumption about Fair Play is correct, the practice of exceeding expectations is now a requirement for every company. 

This does not mean lowering prices, or giving things away.  It means being responsive to customers, whether B2B or B2C.  For example:

• Making it a practice to solve a customer complaint on the first call, or within a designated period of time.
• Beating or meeting all communicated delivery dates, whether it is a product or services.
• Including all elements of a purchase at the time of purchase, not “nickel and diming” the purchase experience.
• Deciding not to charge for something that has been free or bundled in…the Bank of America debit card charge and Netflix streaming video change are two current classic examples of creating customer dissatisfaction.

I am sure that you can implement other actions that are specific to your business or service.  The point is that in America today there is a growing desire for Fair Play in all things.  Recognizing this, good marketers will ensure that their products and services do not run against this current, or if they do, make the appropriate changes.

Do you even know how your products are perceived in the market or do you act with the hubris of BofA and Netflix?  If this movement gains more steam will you win or lose?

RHM ­- 10/27/2011

Q4 is the usual time for pulling together plans and budgets for the following year.  In the past, I have written about the problems and issues that this process generates, but decided this year that a checklist might be of better use.

  __  Strategy, goals and objectives – Are the goals and objectives for 2012 articulated?  Is the strategy to reach these goals and objectives clearly spelled out, with priorities specified?

__  Budget and staffing – Is the budget for 2012, even at an approximation level, available?  Is the headcount forecasted to go up, down or remain the same?

__  Support groups – Are all the support functions (customer support, field services, product services, etc.) in line and capable of supporting the plans.

__  Events – Are all the major events/milestones known, i.e., new product introduction in Q1, major trade show in Q3, major partnership agreement in Q1?

__  Cost and profitability – For multi-product companies, are the costs, by product, going up, down, or remaining the same?  Will pricing remain the same or change?

__  Policies – Is there any need to change or modify customer facing policies or social media policies?  For example, has the current “Response” policy and procedure been effective?  Is the policy about employees discussing the company on Facebook and twitter clear and being followed?

__  Target market – Have you identified the target market?  Is it (audience) the same as it was in 2011?  Does it have the same segmentation?

__  Campaigns – Are there developed campaigns (strategies) to support all the marketing activities?

__  Marketing mix – Is the 2011 allocation of Marketing spend applicable to 2012?  For example, should more resources be devoted to social media, or to trade shows?

__  Tactical product pans – Will the 2011 tactical plan be effective in 2012?  Specifically is the “volume” product still competitive and profitable, is the “loss-leader” able to generate sales, and are there contingency plans in place in the event of competitive inroads?

__  Sales relations – Is there agreement on what constitutes a qualified lead?  Is Sales looking for additional support in the form of Product Managers?  Are Sales’ lost sales reports meaningful in helping to define the Marketing mix?

__  Social media – Which 2011 metrics have been the most useful to Management?   How can these be improved or expanded in 2012, and at what cost?  Additionally:

• Is this the year to redo your website?
• When is the last time you updated your SEO activity/measure?
• Do you have a content calendar with confirmed inputs for Q1, the year?
• Can you improve your utilization of content?
• Are you up-to-date on the latest Facebook, LinkedIn, and twitter changes?

This checklist is meant to be a memory jogger, as each company and situation is different.  The point is that in approaching the 2012 budgeting process without a checklist, key things can be overlooked or forgotten.  The importance of a checklist has been proven by pilots and doctors, and should be used by all good Marketers.  (See: The Checklist Manifesto: How to Get Things Right by Atul Gawande)

Have you constructed your checklist for 2012 yet?  How many items are checked off?  What other items would you add to this checklist?

PS.  If all this is confusing, you can find help in our Marketing Resource Optimizer (MRO) product.  Click here to obtain a copy of Part 1.

RHM  10/20/2011  

Typically companies go from a very simple organizational structure to some form of corporate or divisional or strategical business units (SBUs).

Start –ups or small size companies are typically managed by one or two people (entrepreneurs) who have the vision and passion to get things started. The environment is usually flexible, dynamic, has little in the way of processes or procedures and is freewheeling. 

Unfortunately when the company hits a certain revenue size or development phases, the entrepreneurial skills become secondary or more bluntly, other skills are needed to move into the next growth stage.

Skills like marketing, sales, or financial become critical for the company to grow.  Again it is more often than not that the original founder does not have the required skills for the next phase.

Here are examples what some call “crisis of leadership” that happens every day:

A small software company was started by a very talented engineer and their initial revenues came from personal referrals, which helped the company grow to a certain point , then the stall point happened and no one seem to know what the problem was. After close to a year of stagnation, a consult concluded that this company was not doing any marketing what so ever, mainly because the founder believed “if we make it, they will come”.  Eventually the founder hired a marketing person and gave her ownership not only for creating some marketing programs but developing the next wave of market development documents.

Another example is about an extremely passionate person who started a charity organization and again grew it to a certain “donation level” and once again things came to a halt. In this case the founder tried to do everything from fund raising to printing the next newsletter. The problem was no one knew who was responsible for what and what their contribution was, so most just sat back and waited for the founder to take action.  Again, objectives and goals were personal and not for the overall benefit of the organization.

A third example is about Larry Ellison and Oracle.  Larry Ellison has great vision and a passion for his company, but Oracle also hit a stall point, but in this case Larry saw he was part of the problem and hired some financial experts and he focused on the next innovations.

For those at the top, here are some things to avoid according to J. Hamm “Why Entrepreneurs don’t scale” Harvard Business Review.

1-Don’t be to loyal to your comrades

2-Don’t become too task and detailed oriented

3-Be careful of single – mindedness,   because this can develop into tunnel vision

4-Don’t work in isolation, leaders lead, do not hide

If you see any or all of the above situations within your company, I would suggest seeking some outside advice in order to get a third party’s point of view.

Remember, a management strategy is just as critical as having a product or service strategy.  Not having a strategy is like sailing a ship without a rudder.

RHL  10/13/11

Two months ago I stubbed my big toe.  Hard.  It still hurts.  After numerous x-rays, pain pills and doctor visits, the diagnosis is a “toe strain” and to “come back in two weeks.”  The doctors have done a poor job of setting my expectations, as I have no idea how long I will have to limp rather than walk normally, or what actions I should take to get better.

The expectations surrounding the use of social media are similar to what my doctors have told me…poorly articulated.  In today’s environment, businesses know that they have to use the new tools.  What they don’t know is how effective each will be and/or which ones will generate the most revenue.  In other words, no-one has been able to set the proper expectations because, frankly, no-one knows what mix of social media tools works best for each company.

The success stories that are trumpeted, i.e., Dell’s ability to move products, Zappos selling shoes with excellent customer service, Amazon’s growth, etc. can be viewed as being particular to each company.  In short, what works for them, may not work or even be applicable to you.

For example, I have yet to hear about a small hi-tech company with a limited number of customers (<2,000) selling high value (>$500K) products or services with a long sell cycle (>12 months) who can track their use of social media to increased revenue.  Many are blogging to gain thought leadership, and are using twitter as part of their customer service, but when pressed cannot say that these efforts have resulted in increased revenue.  They can point to increases in brand awareness and customer satisfaction, but linking the social media activities directly to leads in the pipeline and resulting sales is difficult.

Most corporate management is driven by expectations.  With established goals and objectives management expects people to work toward them.  In today’s world management’s goals are centered on increasing sales and decreasing expenses.  Activities that do fit into these goals are deemed expendable.  Since many of the social media activities in a B2B environment cannot be tracked directly to sales, and with the increasing pressure to cut expanses, support for the resources required to engage in social media “experimentation” may be diminishing or lacking.

Can you share a B2B example of how social media activity can be directly linked to sales?   Are you being forced to justify the time and resources spent on social media activity?  How are you doing it?  Let me know.

RHM  9/20/2011 

Last week my barber gave me a first hand lesson in how confidence impacts the economy.  As I usually do, I asked when I got in the chair, “How’s business?”  His response was that it was down.  “How could that be?” I asked, “Everyone needs a haircut.”  His response captured the confidence problem that is sweeping the country. 

“Assume 1,000 customers,” he said, “who usually get their haircut every four weeks, but because of their confidence in how things are going, they decide to put off their haircut by one week.  What does that do?”  I did some quick math.  If a person gets a hair cut every four weeks, that is 13 haircuts a year (52/4 =13).  If he does it every five weeks, that is 10.4 haircuts a year (52/5 =10.4). The result is a 20% drop in business (10.4/13 = .8).  Assuming an average bill of $16.00 (not counting any tip), a 20% decline in the number of haircuts translates to a $41,600 revenue decline.  Tony’s business is not off 20%, but the point was made.

So, because some of his customers are unsure where the economy is going, and feel that it may be best to economize, they are cutting back a little.  This has ripple effects through-out the economy.  Tony and Jim probably won’t take the boat or RV trip they thought about in the spring.  Their purchase of supplies is down. And their fixed costs are edging up.  To offset this they are now open to 7:00 PM on Thursday, and have kept their prices stable for over a year.

The lesson learned from this is that how the decision maker feels about the economy is often the key to a purchase or not.  If he/she can feels that this is the time to hold back, due to a lack of confidence on where things are going, they will do so, whether it be a haircut, a new set of tires for the car, a new dress, or going out to eat.  If they are confident that things are going to be better, then they may be more likely to get their hair cut every 4 weeks.

This applies to those who control the purse strings in companies.  If they personally feel that the economy is trending down, they may re-think purchases and/or commitments.  Certainly Dick and I have seen this behavior in our consulting business.

The net of all these delayed haircuts is that the economy continues to settle to a new, lower equilibrium or steady state.  After all, men do have to get their haircut sometime, and tires and cars do wear out, and new capital equipment has to be purchased.  For the CMO, this means that his product or service has to be top of mind when the purchase decision is made.  And that the product/service sold surpasses the buyer’s expectations.

I will continue to go to Tony, as I have been going there for over a decade, and it is where I learn basic economics.  But I wonder how the other product/service providers are positioning themselves as their markets sort themselves out.

My advice to help turn the economy around…go get a haircut!

RHM  8/11/2011   

Table 2 in Verizon’s 2011 Data Breach Investigations Report suggests that data breaches occur frequently in relatively small companies.

Table 2. Organizational size by number of breaches (number of employees)

1 to 10                                        46

11 to 100                                  436

101 to 1,000                           74

1,001 to 10,000                   49

10,001 to 100,000 59

Over 100,000                       55

Unknown                               40

It may be that these smaller companies have not had the time to construct and test their defenses; hence they represent “low hanging fruit” to attackers either outside or inside.  Larger companies may be more attractive due to their size and potential, but they may also be much more difficult to penetrate.

Regardless of being large or small, it is worth noting that in today’s world there is a high probability that something bad will happen.  It could be an external hack, a social network mistake, or a concentrated effort by external groups to convince you to change your ways (See:  http://www.1goodreason.com/blog/blog/2010/05/19/nestles-social-media-meltdown-case-study/ )

The astute CMO understands that something bad will happen and consequently has a tested Marketing recovery plan in place.  Like an IT or Manufacturing/Operational contingency plan, the Marketing recovery plan swings into action when an “event” occurs.

For example, a small public hi-tech company might wake up one morning and discover that its intellectual property (IP) has been hacked.  Assuming that this might have a material impact on earnings, Management has the responsibility to disclose this information to the SEC and communicate it, in the best way possible, to shareholders and other interested stakeholders.

In a small company, how would this crisis be handled?  Does everyone know what to do?  Who speaks to the press, the SEC, investors, suppliers, employees?  Who instructs customer facing people what to say, how to gather responses, etc. etc.?

Having a tested recovery plan in place mitigates some of the immediate panic and uncertainty when an event occurs.  It certainly is not the time of “on the job” training.  As the voice of the company, it is the CMO’s responsibility to construct and test the Marketing recovery plan.  This includes getting Management’s buy-in on how a response is constructed and communicated.  Failure to act appropriately can severely damage a company’s image and tarnish brands forever.  Both the Chrysler-twitter embarrassment and Epsilon’s reaction/comments to its data breach have been criticized as to how they were handled. On the other hand, the Red Cross got kudos for how it handled a potentially damaging tweet.  See: http://mackcollier.com/red-cross-social-media-crisis-situation/

Does your company have a tested Marketing recovery plan?  Is the Marketing department prepared to lead the way when a crisis occurs?  Knowing that it is a matter of when, not if, an “event” occurs, shouldn’t you be prepared?

RHM  4/27/2011

In talking with clients and potential clients, Dick and I see  companies that are making “mistakes.”  These are common regardless of size, maturity level, or industry.  The most frequent that we see are: (not in any order)

• Not cultivating the installed base.   Too many companies remain in the “kiss and sell” era.  They forget that their customers are a valuable resource. Key opportunities come from:
  • Up selling to the newest and latest release.
  • Mining the installed customer base for case studies, testimonials and referrals.
  • Establishing relations with new hires in the customer base, who may become decision makers.
  • Using social media (like LinkedIn) to see where ex-employees have landed and following up with them.

• Using the wrong mix of new and old tools.  Some B2B companies are reluctant to adopt social media tools.  Others have gone too far in that direction.  The key is to understand which of the new tools best suits reaching and interacting with your customers and then implementing it.  We advise:
  • Poll your customers to see what resonates with them.  (The assumption here is that future customers will mirror existing customers.)
  • Measure the effectiveness of your current tools, i.e., which tool generates the greatest number of leads, which one reaches your customers, which ones don’t work.  Cut back on the ones that don’t work, increase the investment in those that do.
  • If your customer base is migrating toward some of the new tools, go with them, don’t fight it.

• Not training everyone in the company on the corporate message.  Today almost everyone is using some form of social media.  Inevitably they will tweet, blog or comment about where they work, the products/service, the management, etc.  It is important that everyone be on the same page.  We advise:
  • Make sure that there is a written policy about the use of social media.  It shouldn’t be long or complicated, but should outline the “dos & don’ts” of employee use.  This should be read and signed by each employee annually.
  • Train the customer service personnel, who are often a primary contact point with customers, about the corporate message.
  • Train those involved with Public and Analyst relations on the same message.
  • Train all “C” level executives on the message – No one is exempt.
  • Implement listening of social media for comments about your company, and have a documented, well understood, and tested reaction plan in the event of a crisis.  Remember, you won’t have much time to think how to react, and you must react quickly.  How the NFL is handling the screw-up of sold, but no seats available, Super Bowl tickets is an example.

• Rushing to introduce a product before it is ready.  While Google pioneered the concept of introducing “Beta” versions, on the whole these were well tested, functional products.  Those that have been pulled (Buzz et al) have been the result of market demand, not technical limitations.  We see some companies that are trying to beat their competition by releasing products with limited features or incomplete testing.  In most cases these products fail.  We advise:
  • Unless you are the size of Goggle, forget about the “Beta” concept.  Develop, test and release the product in its normal course.  Don’t force an incomplete product to market early.
  • When launching a product, make sure that the whole system, i.e., sales, marketing, customer service, finance, etc. is ready for the launch.  Having a new customer call customer service and hearing that they don’t know about a product (or problem) is a no-no.
  • Don’t anticipate a hockey stick revenue increase.  99% of products grow slowly.  Very few things rocket up.  Setting unreachable expectations, even when you have great market research results, is a dangerous path.
  • If you choose to go the “Freemium” route, make sure that you fully tested the appeal of the Premium product, and can extrapolate from the “Freemiums” that you ship to a profitable position.  Additional, if this is offer is part of a product line, make sure you fully understand its impact on the whole product line, not just the Premium offer.

• Not resolving the definition of a qualified lead with Sales.  Both Marketing and Sales are under pressure to produce.  It is too easy for the functions to get into a finger pointing contest about who and what. (Ever watch brothers or sisters fight?)  The point is that an agreed upon definition isn’t that hard, what is hard is to stick to it over the course of a year when revenue goals aren’t being met.  Note that the definition of a qualified lead is seldom an issue when sales are growing month over month.  We advise:
  • Establish an agreed upon definition, and mutually present this to the CEO/COO.
  • Establish goals for marketing to provide qualified leads.
  • Establish procedures and feedback mechanisms on how Sales is going to handle the leads, including lost sales reports.
  • Set a 6 month milestone meeting where each function reports on how they met their goals and what needs to be done to improve the process.

• Waiting too long to make a change.  Of all the mistakes that we see, this is perhaps the most common and most troublesome. It expresses itself as Marketing management being wedded to a philosophy or approach that is detrimental, if not fatal to the company.  This could be a failure to push for a new product to replace the “cash cow,” the continuation of a campaign that is old and getting decreasing responses, or not reacting as the product and market matures by changing the distribution model mix (indirect vs. direct for example), etc.  We advise:
  • As CMO, if you haven’t made a significant change in the past 24 months, (re-doing the website doesn’t count) do so, or your successor will have that privilege.
  • Choose only one thing to change at a time, so choose wisely.

What problems have we missed?

Comment below or send me a note at Contact US.

2/9/2011  -  RHM