Well, I hope this helps you in your decision process and remember in all marketing, segmentation if one of the first critical step in any successful marketing activity!
RHL 9/9/10

Note: this article is focused on business to business not business to consumer (spending on items like advertising and promotions are usually greater in the consumer market).

Sales People One primary communication method in the B2B world has been the sales person and their personnel selling efforts, but this method is not only very expensive but does not scale well. Suggest augmenting this with other communication tools.

Advertising’s primary contributions are to provide awareness and provide creditability for the vendor (if you do not believe me, seen all the Toyota ads lately!). It has been proven that sales and profits are better with advertising then no advertising at all. So make sure your advertising first supports the overall marketing strategy and is integrated with other marketing activities. Lastly, if you do use advertising, make sure it will pass the “threshold” of awareness. Too often marketing managers start an ad campaign and don’t run it long enough to create awareness and thus those dollars were completely wasted. So if you don’t have enough in the budget to be successful, utilize the money somewhere else.

Direct mail or email campaigns:  Direct mail is good for promotions, supporting sales activities, and communication to your various channels. Emails can address the same issues with the added benefit of having a quick response or the ability to receive a request or answer a question in a very timely manner.  Again like advertising, one shot will NOT accomplish your goals, you need to contact with your targeted audience via multiple mailings.

Trade shows: Good place for a product or service introduction, speaking engagements, leads, and face to face with potential buyers. But given that, I believe trades how are actually on the decline, so I would highly recommend analyzing the benefits of being at a trade show versus its overall costs.

Seminars/Webinars:  A relatively inexpensive tools, especially if your goal is awareness, thought leadership or demonstrating a customer application.  You can have a “captured” audience and have follow ups with them.

Catalogs:  Are basically dying if not already dead, mainly because of the web and its ability to show products and services in a more robust manner, Web catalogs are less expensive and they can reach a far greater audience.

Social Media (Blogging, twitter, etc.) The use of these media by enterprises is growing every day.  Their primary purposes are for awareness, thought leadership, lead generation and getting feedback from the community. I would recommend as a minimum that enterprises at least “listen” to what your customers are saying about you and your products.

So, again, it is not how much one has, we are all painfully aware of that, but what the appropriate mix is.  You need to balance your marketing communication methods to optimize your returns.   This mix selection will vary depending on what phase your enterprise is current in and your overall goals.  A start-up might use the social media tools to generate awareness and creditability, while an established enterprise might rely on its sales team along with some direct/emails and seminars.

In any case I would suggest testing your mix on a selected sub segment and analyze the results and make any adjustments before going with the full programs.

RHL 8/24/10

 Five major direct marketing misconceptions:

 1-      Given today’s technologies, direct marketing is the only way to go and it is the least costly. Well, technology is changing the way we do things, but technology alone is not always the key driver for change. Remember that your potential customers are humans and thus they vary on how they “gather” information and interact with technology. Secondly, some products and services are not very well oriented towards today’s technology. As for cost,  the “web 2.0” process is far from free; take a complete look at the cost to do direct marketing. In some cases you may have to add resources to manage the multiple divergent activities.

 2-      Everyone has email, so I can send our emails and the orders will start coming in.  This plan of action may be in violation of the CANSPAM act, and may alienate potential customers.  Just like traditional telemarketing, one needs a compelling offer, an approved targeted list, a call to action, and supporting activities such as case studies, blogging for creditability, and must importantly a well thought out email program, because one mailing alone will not cause potential customers to react.

 3-      Social marketing has no proven results, so I do not need too use any of these new tools! Understand that the vendor to consumer model has changed. The consumer is in the driver seat and consumers can and are talking about enterprises and about enterprises’ products and services. So as a minimum, one should at a minimum, monitor what is being said so you can react. Secondly, many end users are using media tools like blogs, twitter postings and Facebook to become informed before they make a decision, so it stands to reason that if they don’t see anything about your services or products, you will not be considered.

 4-      Hard copy (print) mailings are no longer used because they are not effective. Again, it is not a question of what to use, but your mix.  Hard mailings are and can be very effective.  A good example is a mailing to “new” customers, those who may not know about you. Hard mailings add personalization and get around potential filtering by the corporate IT email structure.  Hard mailings can also precede or follow up as part of planned social media programs.

 5-      The web site is nice to have but once I get it launched I can focus on other marketing programs. As I noted in item number three, the consumer is in control. Their major source of information is the internet, starting with your web site. If your web site is not user friendly, up to-date, contains real information and provides “give a ways” such as papers, case studies, white papers; and then you have just lost another potential customer.

 In summary, as I have always stated, look at your strategy and goals and see how direct marketing as a sales channel will support them.  In reality, your sales model will probably be a mix.  So the real question is how much direct marketing and what percentages of its components will be used. Also like other marketing programs, know your audience and know what they are thinking and saying about you.

 Do you know how your web site compares to your competition?

 RHL 01/19/10

Last time we discussed the scenario of a direct sales channel and switching or adding an indirect channel. The key issues were: a complete strategy, reseller selection and a reseller program(s). This posting is about adding a Direct Marketing function. Again, like the last discussion, make sure you have a sales strategy or that your sales strategy is updated. We will also assume the strategy is valid.

Here are five key considerations for a direct sales channel planning on switching to or adding a direct marketing channel.

1-Product selection for direct marketing

Do the products within your portfolio meet the following criteria?
- Are the products straight forward and well understood by the market place?
- Are the products fairly standalone (no real services required)
- Do you have a timely distribution system (infrastructure) in place (turn around will be critical)?
- Does your infrastructure support multiple SKDs, as well as tracking and ordering online?

If your answers are yes to at least 2 or 3 of the four then continue. If you answer NO to most of the above, going direct marketing is not out of the question but you need to address the action items below.

Action items
-You will need to augment the product with very compelling features and benefits.
-Create or partner for a rapid/ quick turn around product distribution system.
-Develop your web site so that it handles the complete cycle for transaction activities.
-Begins staffing for customer calls, for those who don’t want to order over the web, those that have difficulty and those who have product problems upon receipt or under warranty.

2- Marketing methods and tool selection

Perform an analysis on which media you will use and what mix:
-Analyze how integrated and automated your marketing programs are, procedures and rules are (considering cycle times to be competitive, automation and responsiveness is critical)
-Telemarketing methods need multiple scripts and an installed follow-up system.
-Investigate what tracking tools you will use.
-Do you have compelling value propositions that will catch your potential customer’s attention?
-What is the best mix of traditional marketing (ads, telemarketing, etc.) versus email, blogging, face book, and twittering is appropriate for your targeted audience?
-Is your data base set up for all of the selected activities?
-Is your web site geared for transactions, and interactions?

Action Items
-Start monitoring what is being said about your company and your products.
-Do an ROI on the media mix and potential revenue per media.
-Do you have the budget and appropriate resources for social media methods (blogging, twitter, tracking, etc?) and skill sets?
-Develop or modify your customer database so it is integrated, complete, and flexible so that you have a closed loop marketing (customer- sales- marketing- back to customers) capability.
-Develop a metric/measurement system for the direct marketing (example, all programs must have an ROI target).

3- Marketing programs

You should have a series of marketing campaign well thought out ahead of time (multiple touches and offers will be required in order to develop a reasonable funnel).
-What will be the offers?
-How will the campaigns be linked (themes, or offers or audiences as examples)
-Do you have marketing “packages” oriented for each targeted audience or and campaigns?
-
Action Items
-Perform market testing for the campaigns and packages
-Develop some give-away within your web site such as white papers, free ipod, webinars, etc.
-Financials- prepare a complete forecast analysis to understand realistic revenue targets, realistic costs and thus true margins and ROI per campaigns.

4- Financials

Direct marketing will have a startup operating costs just like a product introduction, but the difference will be in the media methods, tools and the skills required in performing this closed loop marketing. So, just like the indirect model case build a complete business model with attention on the following areas:
-Data base organization and analysis
-CRM/SAP type applications
-Web information analytics
-Creative offers
-Web 2.0 type dynamics
-Skills sets required

Action Items
-Related to action item in 3- develop a complete business case.
-Have measurements and timelines with key milestones to determine progress.

5- Cultural Environment

Since direct marketing is under going some dynamic changes, new functions/ procedures need to be introduced into your enterprise. Management also needs to understand that some of these tools/methods are new and thus more of an art than pure science, so be flexible, and prepare for changes along the way. What will be your policy regarding twitting and face book both internally and externally (see our blogs regarding social networking (www.firealarmmarketing.com/blog/))? You also need to consider the value of marketing of brands versus your own internal content marketing.

Action Items

-Educate management and key people involved on the nuances of direct marketing.
-Develop policies and procedures for the various tools and methods of direct marketing

Well, as you can see, Direct Marketing, like other forms of distribution must have a strategy, but differ in that you will probably need new tools and skills to be successful. Overall, you probably will end up with a mix of media marketing with the biggest issue what percentage of each will result in the best return on your investment.

We have looked at different channels of distribution, some guidelines for switching or adding other channels. The keys overall are having a strategy, knowing what the selected channel can actually do for you and having the appropriate programs and tools to be successful.

So, what are you waiting for, get busy and start that channel(s) and start selling!!!!

RHL 10/20/09

A number of you have asked, “Who does sales channels well?” after reading my series about different sales distribution models.  (www.firealarmmarketing.com/blog).

The Direct Model:

            Some of the major insurance companies demonstrate outstanding customer segmentation by their marketing campaigns.  They are focused, know their key messages and develop “packages” that address customer attributes along with time sensitive pricing.  The sales team is given very specific directions regarding the characterization of the customers they are to pursue.  The best parts of their marketing and sales program are the easy to remember, catchy messages. 

            On the flip side, there is a manufacturer of communication products and services north of me who should be written up as a business case for graduate schools.  They did most things wrong.  First and foremost, they really didn’t have a strategy.  Not only did they seem to change their strategy, but they also changed their targeted customers and what solutions that they were selling to them.  These actions (actually lack of actions) resulted in many issues.  Some of the major impacts were loss of sales force support and moral, customers losing confidence in them as a trusted vendor, fewer purchases and confusion on what the vendor actually offered.

The Indirect Model:

            A dominant vendor in the telecommunication industry is writing the book on how to work with distributors and reseller.  While they have some direct sales, they predominantly depend on resellers.  Their great relationship is created on a few good practices; first, the vendor is doing a wonderful job in the selection of the resellers, second there is a very clear distinction on who sells what, who is paid for what and what territories each one should cover.  Another unique feature is that the resellers are measured on customer satisfaction!

            A vendor, who is struggling with indirect model, is an East Coast manufacturer.  They started with the direct model but not only did they change which products to sell, they also changed their compensation plan, all of which demotivated the sales force.  Believing that the indirect model would be less costly, they changed to an indirect model, signing up hundreds of resellers.  There was one problem they had no strategy, which resulted in confusion among the direct sales force and the resellers.  We all know the expression; burn me once, burn me twice, well the resellers got burned a number of times, thus resulting in lost of creditability with the vendor and vendor sales.  Their next misstep was to develop a strategy (you are saying that is what you are supposed to do first).  Multiple strategies for the resellers were developed, not one general one.  These multiple strategies also resulted in confusion everywhere and thus continued lost of credibility and sales.

The Direct Marketing model:

            A major PC vendor probably wrote the book on best practices for the direct marketing model.  Their key strategy is reducing costs on the supply side and the end user side.  The other key element is their direct marketing functions.  They know, to the greatest detail, their customer’s attributes and segmentation.  The vendor also has a well-defined customer satisfaction program, which keeps them in touch to their customers and thus the ability to look forward and meet user’s future needs.

            If one looks at the dot com era, then we can see many examples of poorly handled direct marketing.  There are two common mistakes among the failed dot coms.  First is their business plan/strategy; they were not real at all (forecast were ridiculous).  Second, they really did not know their potential customers.  An example of this is the pricing of their products.  Vendors were totally mismatched with what they thought they could charge and what the price consumers were willing to pay.

If we learn anything from both the good examples and not-so-good enterprises examples, strategy was the key for both directions these companies undertook.  With no strategy, everything else is time wasted!

Is your distribution strategy clear and well understood by all?

RHL 9/17/09

Noting that generalization is always dangerous, I will ignore it and state that if one had to list just one  key consideration for the three models it would be the following:

Direct model – Leads. Leads, leads – thus marketing is a key functions

Indirect model – Selection of the partner (who sells what, where and their value proposition)

Direct marketing – awareness and compelling messages (marketing again)

NOTE: each model has its issues and as I stated, you must start first with knowing your overall strategy and goals before you even consider which channel(s) to consider. AND if you decide on more then one model, things get very complex very quickly.

In any case, here is a score card that will as a minimum give you some direction on what distribution model(s) you might want to consider.

Score yourself 10 (closest to your needs/goals) to 1(least needed or relevant) for each category.

Here is where it gets tricky!  If you scored 80 points plus or minus 5, then you should consider the direct model.  If your scored 40 + or – points, then the indirect is your most likely model, but if you got 8 points + or – then the direct marketing model is the most likely choice.  But if you are like most and scored in the “grey areas” like 65 points then, sit down, gets lots of paper, block out your calendar and start analyzing the multiple model approach.

Again, thanks for your comments, if we can be of any help regarding channel selection or any marketing or business development issues; give us a call or email us www.firealarmmarketing.com/contact-us/

RHL 9/14/09

Account control: In the direct marketing model you really have very little control over the accounts.  Your “control” is in your targeted marketing, the message, the “spin”, the advertisement or promotion that captures the intended audience.  Note, these activities are far more effective and highly scientific in the consumer market versus the industrial sectors.

Product environment: For a pure direct marketing, the product characteristics must be straight forward. Its features must be either clearly known or it’s the current hot trend. A classic example is that late night TV ad that offers on a limited time basis, not 5, not 10 but 15 knifes for only $19.95 AND if you order today you get a free knife holder, valued at $1,000 dollars.  Seriously the real issue is that the ads have to run hundreds of times and appear as the greatest deal since night baseball. The main reason for this is, you really have no control over the audience or feedback, and thus it is a “numbers game.

Services – Similar to the product characteristics, any service must be well established or a hot trend for it to be successful via direct marketing. Both product and services need multiple exposures, multiple medias and clear impacting messages.

Customer Segmentation: Other than other marketing activities, this is probably the key issues for direct marketing.  One needs to really analyze who you are targeting and know to the n^th degree the proposed audience. Considering that one will be using email or telemarketing or direct mail campaigns or any combination of the three to reach an audience; well designed customer segmentation is critical. The importance of this activity can not be overstated when one realizes that a good return on mailings is 3- 5 %.

Marketing support: If you think about it, direct marketing distribution is fundamentally all marketing; thus your sales funnel, and eventually actual revenues will be almost a hundred percent dependent on marketing. Given that the key functions are the following.

1- Customer segmentation as mentioned above. I would add that testing the segmentation and the message are critical before any broad scale campaign is initiated. Also hold some focus groups or conduct blind tests to help validate your assumptions.

2-Make it extremely easy for the potential customer to “buy” the product or service. Do not make them fill out a hundred items to get the product. A simple phone number or email or return card should be all that is required. If you do otherwise, you run the risk of “turning off” the customer. So, a creative, impactful call to action and asking the customer to response is very critical.

3-     Campaigns- Understand that it will be highly unlikely the your potential customer will respond or act on the very first marketing activity that he or she receives is important to know.  One must “hit “ the customer repeatedly (5- 10 times depending on the message, product or marketing activity). Knowing this, marketing must design campaigns that last over months or quarters and contain key items such as the overall message, key promotion for the repeated activities, linking messages, uniqueness for the particular sub activity within the campaign and a consistent call to action for the overall campaign.

Financial considerations:  the biggest item here is what marketing activity will give you the best return on your investment.  This decision is not as straight forward as one might think.  As an example, it not just the cost of a mailing, but is a mailing  the appropriate media for the product and the customer. Another example is email mailings. While the cost is relative inexpensive, if you are an unknown (no brand) and the email is not compelling then your response rate maybe unacceptable. In reality, most direct marketing is a combination of activities, thus your expenses have to be weighted against the overall potential returns.  One might use some dollars (expensive dollars) to create awareness through advertising and less expensive dollars on an email activity as a follow – up.  In any case analyze the overall cost with the overall expected return and balance your spending for the best return

Below is a high-level pros and cons regarding the direct marketing model.

Direct Marketing Model

Functions                                Pros                                                     Cons

Sales force                               None –really marketing              No real closed loop 

                                                Inexpensive (if done correctly)   Specific type products

Product                                    Potentially high margin                Volume for sucess 

                                                      Usually commodity types            Commodity type       

Services                                   Proven experience                      Account control

                                                                                                 Potential costly support

Marketing                     Unified campaigns     All about marketing                                        

                       Volume sales                            lack of customer loyalty

Financials                                 Potentially inexpensive                Potential poor returns

Again, as in the last three posts, do your due diligence relative to your strategy and weighing whether, the pros outweigh the cons relative to your overall strategy.   Secondly, understand that most enterprises use a combination of two or three of the models which is where the funs begins.  Things like channel conflicts (who sells what, who gets paid, what territories are covered by who) come into play and nine- times out of ten, poorly designed models relative to channel conflict, results in missed objectives and goals or just complete failure.

In any event, I hope this help you in selecting your distribution model, next time, I will draw and overall comparison of the three models. Until then like to hear from you about your experiences or if you have any follow up questions.

RHL 8/20/09