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

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

Recent news reports have highlighted lower housing prices, lower consumer confidence and fewer jobs added in May than anticipated.  One housing observer commented that "we are bumping along the bottom."

So readers, it is time for a poll:

1. Do you think the economy is going to get better, stay the same, or go down for the balance of 2011?

2. Has your (or your firm’s) view of the economy influenced resource allocations and/or buying decisions?

3. Do you believe Marketing, using both old and new tools, can help generate revenue regardless of the state of the economy?

You can post your answers below in the comment section, or email them to me: bob.mannal@firealarmmarketing.com.

Thanks, and I will summarize the respnses.

RHM 6/1/2011

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

I am beginning to sense a trend, most likely caused by the economy, to position the Marketing function in a sales support role…nothing more.

I feel those companies that are doing this are making a terrible mistake and will do irreparable harm to their organizations.

If Marketing’s role is limited to lead generation and supporting the sales force, then the important work of acting as a hub is lost.  Once lost, it will take the right person a long time to re-establish the culture necessary to be successful.

The classic Product Manager (Not a Product Marketing Manager, whose view is generally 0-12 months) acts as the hub of the wheel.  He/she has the vision of the product today and tomorrow and communicates this via the product roadmap.  More importantly he/she conveys this unwavering vision to the other functions:

To Finance:  The PM defines the selling price, discounts and margin generated by the product.  He also provides unit forecasts for the next 12 and 24 months.

To Marketing: The PM provides relevant content, direction, and approval of promotional literature/collateral.  If he/she is not the spokesperson on the product for the company he trains that person.

To Sales: The PM provides competitive knowledge, trains the sales force on significant differentiation and assists in closing large deals…when the customer wants to see someone other than a salesperson.

To Development: The PM is defines the product to Development through Market Requirements Documents and by approving Functional Specifications.  He/she is always there for the necessary trade-offs between feature inclusion and time of delivery.

To Management: The PM is the “go-to” person when something good or bad happens; able to provide an interpretation of what it means and its impact.

To R & D: The PM provides direction via the product roadmap and information regarding competitive capabilities and features.

To PR/AR/IR: The PM provides relevant content, information, and messaging.

To Customer Service: The PM provides support both on a pre and post sale basis.

The key point is that there is a hub which communicates a consistent message to the different functions causing them to be aligned in a common goal. If this hub is removed, the wheel stops turning.  Development may end up making what Sales wants…unfiltered.  Sales doesn’t have a credible backstop from HQ.  Finance extrapolates from past numbers, etc. etc.

Those companies that view Marketing’s role as that of an inside Advertising agency or limited to lead generation activities may see a short term boost in sales due to the increased application of resources.  However, as the product cycle turns, the lack of focus and a common presentation of the next product(s) will cause the organization to scramble and fall behind.

A well constructed Marketing function includes the lead generation/sales support activities as well as the Product Management role.  Does your company have a “hub” who clearly communicates the vision of his/her products, or are you trapped in an organization that feels that Marketing exists to support sales?  If the latter, leave now.

RHM 12/16/2010

Dick and others are recommending that CMOs look to reorganizing the Marketing function in 2011 in order to be more responsive to the demands being placed on Marketing.

Sketched below is a first draft of a 2011 Marketing organization for a B2B company with revenues north of $150M.  It assumes a separate, but equal, sales organization.  For smaller companies the same functions are required, but it is understood that they may find it difficult to fill each of the discrete functions.  Each of these functions reports directly to the Chief Marketing Officer.  (CMO)

View is 12 to 18 Months out. Works with Development to deliver the differentiated application solution at the right time and right price. Responsible for training, sales support and product road-map. Shares competitive analysis work with Marketing Programs.

Responsible for pre and post customer support. Acquires information by listening to the customer and is responsible for providing a positive customer experience.  Provides input to Solution Manager, Sales and Marketing Programs.

View is 0 to 12 months.  Responsible for lead generation, tracking and nurturing. Delivers leads via Web Site (SEO, web tools, etc.) as well as events, programs, collateral. Listens to the customer, provides research and analytical information regarding social media, industry and programs. Responsible for the Brand. Trains the rest of the organization on the use of social media. Shares competitive analysis work with Solution Managers.

Responsible for the voice of the company. Delivers new, relevant content that is distributed by Marketing programs. Spokesperson for the company. Viewed as Industry Guru; Expert. Assists in sales support.

PR function executed in social media.   (Note: Marketing organization has dotted line relationship with Investor Relations.)

Have I missed anything?  Does your Marketing organization cover these functions?  Will they in 2011?  In your company, if Marketing is not responsible for all contacts with a potential or existing customer, who is?

RHM    12/9/2010

This is the seventh in a series of articles for the CMO on planning for 2011.

Talking heads and prognosticators will soon fill the air waves with summaries of 2010 and forecasts for 2011.  That we start a new decade and are still in the midst of a recession will add to the babble.

One area of focus will be social media/social networking/Web 2.0/digital marketing, etc.  Some will declare that “tipping points” have occurred and that significant changes will take place.  Others will decry the hype and say that much of what is going on is a fad.

What is true is that no-one can predict the future.  We can, however, learn from the past.  It is true that the automobile basically wiped out the buggy whip business.  It is also true that neither Television nor Radio replaced Movies as a form of entertainment.  What happened is that each form of media grew in its own way and to serve its own segment.

The unknown about social media is that we don’t know how it will evolve. Will the Internet/Google TV/You Tube take the place of older media?  Will tablet devices take the place of newspapers?  Will newspapers follow buggy whips? Probably not.  What is more likely to happen is that a junction will be reached and new branches will appear.  Learning from history:

• Thomas Edison based one of his early companies and efforts on providing DC power to densely populated areas.  He didn’t see the need to electrify rural areas because of the cost to reach only a few people.  The introduction of AC power created the greatest growth in electrification, pushed DC power in a different direction, and created numerous branches for electrical transmission and related electrical products.
• Henry Ford said that the buyer can have “any color as long as it is black,” and almost went bankrupt.  GM/Chevrolet provided color and gained significant market share.  Ford fought back, recovered and prospered. And as an interesting turn, Ford is the only domestic car company that did not have to be recently bailed out by the Government.
• In 1977, Ken Olsen the head of Digital Equipment Corp. said, “There is no reason for any individual to have a computer in his home.”  While that strategic direction didn’t help save Digital Equipment, the PC business today is alive and well…and moving toward hand-held devices instead of in the home.

The bottom line is that people forecasting the future, or making declarative statements are usually wrong.  It takes a significant change and usually a long time before a product or concept is rendered obsolete, regardless of how hard VCs look for “disruptive technology.”  More frequently, new branches appear, grow and multiply.

How should the CMO react in the face of the 2011 forecasts?  Our advice has been fairly blunt:

• Recognize that you will probably have to reorganize/restructure for the “new” marketing.
• Continue doing what works.  (If you don’t know what works, set up a measuring process.)
• Join the digital age. Set aside a good portion of your resources to experiment.  Generally you will need more time (people) than money.
• Cultivate your installed base of customers in two ways:
  • Listen to what they say about your product and services, and make appropriate changes
  • Provide them with new products and services…it is the most inexpensive sale you can make
• To grow, seek adjacent markets with current products and services but move carefully.
• Recognize that there are increasing demographic divisions occurring, both in your staff and in your buyers:
  • The Millennials  act differently than the Baby Boomers.  Embrace the differences and use it to your advantage.
  • The rich (both people and companies) are getting richer and the poor are getting poorer.  Unless you can sell a lot to the poor people/companies, concentrate on selling to the rich.

As the CMO have you prepared your Management for 2011?  How will you react when  the best known talking heads suggests that all the world is going Web 2.0, and your management wants to know why you aren’t following lock-step?

RHM 12/2/2010

In talking to potential B2B clients, Dick and I frequently come across “myths” or “misconceptions” on the part of management.  As a result, part of our sales time is spent in debunking these myths and setting the record straight.  I thought I would share some of the more common ones.

1. Lessons learned and tactics used in a vertical (or sub-vertical) can be applied to the next vertical with little added investment and matching success. For example, some decision makers believe the same approach used in the K-12 market will apply to the college market, or selling to an ISP is the same as selling to a large enterprise.  Were it only that simple.  While market segments may appear to be the same, on close examination the buying motives, timing and requirements are markedly different.  There is no guarantee that what has worked in A will work in a “related” segment/vertical B.
2. Price reductions lead to increased volume and market share or the old “we’ll make up the lost margin on volume belief.” While this may hold true in some consumer markets, the vast majority of B2B buyers go for value and the fulfillment of specific needs.  Price is frequently low or last on the buyer’s mind.  Key elements to the B2B buyer are; resolving a problem, reliability of the product, service, reputation/longevity of the seller and then price.  In short value trumps price.
3. We know that 80% of our revenue and profit come from only 20% of our customers, and therefore we can adjust our Marketing to serve the 20%.   The Pareto rule, which appears frequently in B2B markets (and sometimes is really 90/10), means that you are vulnerable to a few customers.  If these go out of business or switch to your competitors, your revenue will drop significantly, usually faster than your expenses, and you will end up out of business.  Once a firm has reached a certain size or volume, it must expand its customer base to ensure long-term success. Marketing to the 80% is a requirement.
4. We can cut back on Marketing (Promotion, Product Management, PR, etc.) during this recession because we have loyal customers.  Wrong.  Customers are not loyal, and despite your belief that switching costs are high, if there continues to be downward pressure on margin your customers are going to look for solutions that help them react.  If they don’t hear from you, and see your new product, they may assume that you have nothing new and go to a competitor.
5. Social Networking (Blogging, Facebook, LinkedIn, etc.) is for consumer products. Wrong!  Very large successful companies like Cisco, Dell, EMC, GE and others have embraced social networking.  As a result they have saved money, increased market share and customer satisfaction.  Many of the same tactics and techniques that these larger companies can be used by smaller companies to maintain their positions and grow.
6. We sell to the end user.  Not true! The end user provides information on pain-points and what feature/functions a product must have.  Resolving these issues is the mark of a successful product.  But in the B2B world a sale is made to an enterprise, which often consists of responding to an RFP and/or selling to a buying committee.  In addition, this may be done through a re-seller or distributor, who needs to be sold on your company and solution.  So, in the B2B world selling is done to many people, on many levels, where the end user may only be an influencer in the final decision.

Difficult economic times make it hard for management to make a decision and to act, as the consequences of doing the wrong thing can be expensive and potentially fatal.  Of course not acting can achieve the same result.

Are myths restricting your behavior?  Do you have goals to grow your customer base, reach new verticals, and increase your Marketing expenses in 2011?   If not, I would like to hear what about what you are going to do.  Comment below.

RHM  9/30/2010

This is the fifth is a series about how the CMO should plan for 2010 and 2011.

One definition of nag is: “To scold, complain, or find fault constantly.”  Having picked up Olympic style points from the sainted MIL on nagging, this posting is intended to more than gentle reminder that your planning for 2011 should be 80%-90% done…in short it is a nag.

As I mentioned earlier (here, here and here) by this point you should have a very good idea where 2010 is going to end up, you should have received clear messages from management regarding your 2011 budget and you should have a good understanding on what worked and what didn’t work in 2010.  (You do have all this information, right?)

Other messages from management, conveyed clearly or perhaps just implied, are that expectations are being set for “better” performance in 2011…going back to the days when you were told to both increase market share and margin. (Which you have done before successfully, right?)

In all likelihood your budget for 2011 will be down flat or down, with perhaps a reduction in staff by replacing the lowest performing member with someone “better” in the mid-year time frame. (And getting that green light in June, won’t be any problem??)

From Bernanke on down, economists and talking-heads are forecasting a “bumpy” and “difficult” period as we work out the Great Recession.

With this knowledge and context, now is the time to put forward plans for 2011.  Three concrete low cost marketing plans are:

1. Increased focus on the installed base.  Selling new products or up selling up to the installed base is the least costly sale you can make.  You know who they are, they know you, and you know how they are using your products.  Going to them with an added feature, new product, tied-in service etc., both strengthens your relationship and has the potential to increase revenue.
2. Increase your social media presence.  One or more of the social media channels fits your company, be it LinkedIn, twitter, Facebook, blogging, or specific user groups.  Being active, both by following and contributing, increases your visibility, works to enhance your brand and has the potential to increase leads.
3. Launch a new product on a “beta” basis.  Google has perfected this to an art form, and there is no reason why you can’t follow suit.  Take the current output from development and launch it as a “beta” to a defined part of the market, be it geographic or vertical.  Use the feedback to improve the product when you make it fully available later in the year.

As noted previously, those companies that engaged in aggressive marketing during the Great Depression not only survived, but came out winners.  The same will hold true for players in the Great Recession.  Holding back, hunkering down and waiting for the storm to blow over is a sure way to lose market share, customers and profitability.  Going after customers and providing a significantly differentiated product, where the value proposition is clearly understood, is the path to success.

So if your CMO and management has not done these, give him a nag with a proposal for 2011.

RHM  9/20/2010

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