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

Having watched, observed and implemented many of the current social media tools, I felt I was in fairly good shape toward the end of 2011.  I got a little confused by Google+, but it went in OK, although very few people seem to be using it.  Then came Pinterest.  Again, installation was easy, but for me and many of our clients, its applicability to hi-tech B2B is unclear.

2012 has brought a new wave of applications and platforms which, along with the push toward using video and mobile applications, has me wondering if social media is the next bubble.  It is unclear where to put scarce resources, especially since the return on existing tools has a limited track record, with one blogger reporting that only 13% of B2B companies drive leads with social media.  Should I chase after Highlight, Glancee, Banjo, Chime.In, Scrolldit and others?

As with everything related to consumers and businesses, the competitive arena will thin out over time, but backing the wrong horse early can be costly.  Imagine believing that the Stanley Steamer was the car of the future, that DC current was the form electricity to use, or that MySpace was the way to reach your buyers.  In the past, reasonable people chose all these options.

Another element contributing to my fatigue is that “expert” advice is conflicting.  One group urges companies to get involved in social media as quickly as possible, and to engage with the customers and buyers immediately.  But another group of “experts” strongly suggests that you do everything right, that an error resulting in negative customer perception is very difficult to overcome, in short be like Zappos out of the gate.

Sifting through this overload of choices and advice, I am urging our B2B clients to do the following, once their strategy and objectives are in place:

1.      Today, before they begin working with you buyers know about your product and services.  Recognizing this, allocating resources to your web site and establishing industry thought leadership is job one.  To generate leads, one must cover all aspects of SEO, along with developing integrated marketing campaigns that nurture leads, while maintaining brand and position.  To obtain thought leadership, blogging, speaking, writing articles and commenting on applicable groups is mandatory.  These elements must be covered both well and completely before any diversion into social media.

2.      Find out which social media tool the bulk of your buyers use, be it Facebook, LinkedIn, Twitter, YouTube, etc.

3.      Implement your social media offering on and around that platform. 

4.      Ensure that the organization is prepared for the commitment, in time and resources, to meet the needs/demands of your involvement regarding both the website and social media platform.

5.      Measure your results at 3, 6 and 12 month intervals.

6.      Ignore, for the present, the buzz surrounding the “next best thing” in the social media space.  There will be major and niche players that may or may not be useful to you.  In the short term, let them establish themselves and let the dust settle before allocating resources to them.

Dealing with social media is difficult and time/resource consuming.  If you are not careful, it can cause you to lose focus on what is really important, which is generating leads and promoting your brand.  The path to success lies on keeping your social media efforts simple, and measuring your progress on a regular basis.

How tired are you when it comes to social media?

RHM  3/27/2012

I am not so concerned about the method or methods you use but more importantly that you or someone is DOING an analysis.  In today’s age with all of the types of methods and tools available, I find it absolutely amazing how many companies are either not doing any analysis or do it once and think they are done.   Like death and taxes, one thing you can count on is that your competitors are doing an analysis on you!

Given that let’s first start with the SWOT analysis, some pros and cons regarding it and then a few alternatives methods.

First, SWOT analysis is the identification of Strengths, Weaknesses, Opportunities and Threats that are related to the strategic and tactical direction of a company.   The “scanning “or analysis of the internal factors that relate to your direction and strategy are the strengths and weaknesses.  Examples of strengths could be vertical integration or distinctive skills/ intellectual talent, while some weaknesses could be a poor sales channel or lacking of sufficient financial resources.   Scanning of external forces are opportunities such as new markets or new products, and threats are areas like governmental regulation or lack of market share.  While SWOT analysis is one of the most commonly used methods (2007 global survey of top executives by McKinsey stated that 82% used SWOT, second to competitive analysis)   it like other methods has its pros and cons.

The pros are:

- Easy to understand and the four categories can be acknowledge quite quickly.

-It really does not require a rigorous level of research

-The context is usually within the understanding of the corporation

The cons are:

                -Lists can become long

                – Lists can be poorly defined and ambiguous

                -Not a very detailed or well verified list

Some suggestion on how to improve your strategic analysis:

1-You can augment the SWOT analysis by adding a weight and rating factor to each entry on the SWOT analysis.   The weight is a factor (0 to 1)   that ranges from very important to not important for each internal and external entry.  Next have a rating factor (1 to 5) that indicates how well your company is doing regarding this entry.  Multiply the weight times the rating to get a weighted score. Next, rate each entry how it might impact your company in the short or medium or long term situation.   These enhancement greatly helps eliminating a lot of the guess work, ambiguity, long lists and improves the overall ranking of the to be developed tasks as related to each entry.

2-Another variation of the SWOT analysis is to form a matrix just like one does in the SWOT but have the Strengths, Weaknesses, Opportunities and Threats on the vertical and horizontal axis and is the four sectors produce Strategies for strengths for working on opportunities (SO), Strategies for avoiding threats (ST), Strategies for opportunities to overcome weaknesses (WO) and WT, strategies for a company to minimize weaknesses and avoid threats.

3-A different analysis method is the Balanced Scorecard Method; this tool is used to align business activities to the strategy of the organization.   It works off of four areas; 1-financial by using important financial “levers” or targets,2- customers, it  tracks and measures inputs about how customers view the company,3- business processes that measure where the business excels and 4-growth, measurements to see if the company is growing and improving.

4-A fourth method is the PEST analysis which stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the environmental and scanning component of strategic management.   Here we introduce external factors that in the current environment have become critical to the success or failure of many companies.  One very current example is the price of oil and gas and its impact on companies that are very dependent on oil and gas in one form or another.

In summary, it is not so much which method or tool one uses but most importantly, you must do some form of analysis and do it on a continuous basis!  If you would like to know more about these analytical methods or other methods that might be well suited to your company, send me a note. 

RHL 03/14/12

I have written about deflation before, here, and here.  Recent anecdotes lead me to believe that the rate of deflation is picking up.  Specifically:

1. Direction, from one of my Doctors, to either Target or Walmart to fill a generic description for $4.00, as opposed to my regular pharmacy and higher prices.
2. The rise and use of social networking coupon sites, and extreme couponing.
3. The reported lack of full time dentist hygienist positions…the work being done by part-timers…saving the dentists the costs of a full time employee.
4. The increase of “2 for $20.00” meals at some restaurants, where essentially an appetizer or desert is thrown in for free.
5. The promotion of “X years free service” when you buy/lease a new car.  Unless car prices have gone up to cover providing free oil changes, tire rotations, etc. this is a cost coming out of some profit center.

And I am sure that you have your own examples.  The point is, as the economy slowly moves out of the Great Recession, the 99%’ers are taking advantage of every-day cost savings which, when aggregated together more than offset the inflationary effects of increases in gas and health care.  These cost saving actions and the cost saving mind set easily translates to business decisions, where the buyer or buying committee becomes receptive to "added value" when making a purchase.

For the CMO, this means making sure that each product offering now includes something “extra” that wasn’t there last year.  This could be free added service, lower cost financing, no cost installation, etc.  It is important to note that the value added is not adding another feature (higher speed, more I/O ports etc.); rather it is adding a new additional value to the original product package.

In short, in today’s environment even though a product/service’s value proposition separates it from the competition, the total offering has to be enhanced with an additional value in order to close the deal.  This is especially true in highly competitive oligopolistic markets where the differentiation between the key competitors is very small.

For management worried about how to pay for this change, the answer comes from the company's buyers/administrators.  For every 2-3% that is added to the value of the product, management must demand that the buyers get at least 2-3% added value from suppliers.

On a personal level, are you taking advantage of added value in the products/services that you are buying?  Has this added value swayed your purchase decision making?  Do you see how this process can translate to your firm’s product and services?  Are you prepared for deflationary times?

Or, do you feel that we are in a time of inflation and are acting accordingly?  Let me know how you see the future unfolding, and how your competitors are acting.

RHM 3/6/2012

Before I explain, let me state that I am one of those sport fans: I watch, participate and discuss a wide range of sports.  While auto racing is not one of my most favorite sports, I do watch a variety of auto racing and I have been to a number of NASCAR and Formula races. And to be totally open, one of my “bucket list” activities was to drive a race car.  That item got checked off last year when I rode in a NASCAR car at Daytona and did three (3) laps at an average of 180+ MPH.  That was an experience I will always remember, and from it I now have a tremendous appreciation for all race car drivers.

Back to my point, while Matt won the race, Brad Keselowski (another driver) did some tweeting during some of the caution delays and it has been reported that his followers tripled or went from about 50,000 to over 200,000 followers in a manner of minutes.  You can see one of his tweets and picture here   https://twitter.com/#!/keselowski/status/174327635093106688/photo/1

Now, I will admit some of those followers were probably people in the grandstand, but many were not and the main point is if you have a product or service, do not underestimate the power of social media in getting your product or service some attention and business. If you know your targeted market(s) and the critical issues, then social media is a great way to share your concerns, identify with your followers and build a relationship. If you are not convinced, I would recommend that, as a minimum, your company monitor what is being said about your product or service or competitive products and services so you can gather free information about what the end users are saying and looking for, both positively and negatively.

And by the way do what Brad Keselowski did; pull over in your car before you tweet.

RHL 3/1/12

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

Let’s start in reverse order with the ugly.   A friend of mine had a home mortgage with Washington Mutual and his payments were automatically withdrawn from his checking account each month. One month he started receiving notices from his bank that he was bouncing checks all over the place.

After a lengthy investigation, he determined that Washington Mutual had started taking out additional monies from his checking account without even notifying him.  With further investigation, he determined that Washington Mutual had either lost or corrupted his account information and thus assumed he owed more money each month. This situation went on for months with communication between my friend, Washington Mutual and Washington Mutual’s legal department with no resolution in sight. Meanwhile, he had to keep covering the additional deductions from his checking account. Finally with a notice from his lawyer, Washington Mutual admitted they had made a mistake and corrected the account charges.  There were no apologies, no “we are sorry” letters, and no reimbursement from the accrued finance charges or bounce fees.  Months later my friend switched to another mortgage company. As Doctor Phil would say “What were you (Washington Mutual) THINKING??”   Does Washington Mutual have any vague idea about customer satisfaction?  It must be great to have so many customers that you don’t care what they think about your company and it does not hurt to lose a few each month.

The Bad. I recently booked business class ticket for an international flight with United Airlines.

On my return flight, I arrived at the airport and discovered that my flight was canceled.  Being a seasoned traveler, I did not panic but thought it strange that United did not notify me about the cancelation ahead of time.  Anyways after a lot of “discussion”, United, booked me on another flight BUT with one problem, United “lost” my business class reservation and had to place me in coach and with multiple connections.  Needless to say sitting in coach for 17 hours, having my luggage lost, and racing from one terminal to another did not make me a happy camper.

Now for the customer satisfaction part, not only did United not reimburse me for the total in   the difference between coach and business class, I received no thank you, only a discount coupon that had hundreds of constraints attached to it.  Again, where is the customer satisfaction within United?  Why not have a follow up survey or phone call to first express their concern and let me know they really care.  Why not a future ticket or coupon for money to be used at my discretion.   You would think with the economy the way it is and the trouble the airlines are in, that they would do everything to make customers satisfied.

For the reader, you probably already guessed, that I will tell anyone that will listen about my recommendation regarding United.  Here is a case where United could have gained a loyal customer but instead, has the potential for hundreds, maybe thousands hearing about what one traveler thinks about United.  Also remember the singer and how United breaks his guitar (YouTube, 11M hits so far). Guess, United still has not improved in the area of customer satisfaction!

Now the Good, on a completely different trip, which was a domestic flight to Florida, my wife and I wanted to get on an early flight because of a pending snow storm.  What follows is not really good customer satisfaction, but great customer satisfaction.

Upon arriving at the terminal, a US Airways porter takes our luggage because of the tremendous amount of people at the airport.  At the ticket counter, we asked if there were early flights, the agent first asked us if we had checked our baggage, to which we said yes.  He informed us that since we had already checked our baggage, we could not switch flights, to which we said , Oh, the porter said don’t worry about checking you can change flights anyway, and then I said, we understand, thanks anyways and proceeded to check in with the original flight.  We took our tickets and started to walk away when the ticket agent called us back and said, “Let me see if I can rearrange things for you.”  After about 10 minutes, not only did he get us on an early flight, but found our baggage and rerouted them AND put us in first class.  My wife was so overwhelmed that she almost reached over and kissed the agent.  This experience was about two months ago and my wife and I still talk about it when the topic of traveling comes up and of course we mention US Airways.  Talk about free advertising and wonderful customer satisfaction.

In today’s environment, with instant communication, social media and a very well informed customer, customer satisfaction should be a high priority within any company AND someone and/ or a department should be listening and responding to the customer for the good , bad and ugly situation.   Some believe that customer satisfaction in one of the few differentiations between your company and your competitors.      Who is in charge of customer satisfaction at your enterprise?

RHL 2/15/12

Pawngo, a startup on-line pawn broker (who shares investors with Groupon) thought it could attract attention and gain customers by dumping 8.000 Butterfinger candy bars on Copley Square in Boston, with a sign that said, “Thank You, Wes Welker,”  and promoting the event on twitter.

FAIL!!!!

No marketing campaign should ever be built on or contain derogatory comments or references to your competitors, people or things.  Full Stop.

Boston sports fans are among the most loyal in the country.  They have suffered through heart-breaking losses and enjoyed championships.  Their relationships range from religious to fanatical.

But they are fans.  They know that they are rooting for teams, and that teams win, individuals don’t.  The Patriots as a team lost the Super Bowl.  They would have won as a team.

Highlighting a person, thing or place and making fun of it tends to alienate fans and followers.  Pawngo has about as much chance of gaining market share in New England as Bucky Dent has of being elected Mayor of Boston. (To reference another heart breaking loss.)  What Pawngo, Chevy (who belittled Ford in one of their ads) and others don't realize is that people follow teams (or brands) and an insult to a team/brand is an insult to them.  This negative impact lasts a long time.

While the CEO of Pawngo has offered an apology, it is full of marketing BS, and you can almost hear him chuckling, “gee, I am sorry” …but look at all the free press we got!  While some say that no publicity is bad, I say what Pawngo did is bad and will have a long term negative impact on them.

To young and old marketers, this is a valuable learning moment. 

To Wes Welker and the Patriots, I say thank you for doing as well as you did, we know that you tried hard and gave it your all…job well done.

RHM

2/9/2012

The implication of this 50 year old survey resonates today, as we struggle with 9+% unemployment and 25M+ people either unemployed or underemployed.  Marketers have to maintain or establish a brand that is trusted, to capitalize on a buyer who is reluctant to risk scarce resources on new products.  Conversely, if the trust is lost, so is the buyer.

This is reflected in this 2009 chart on Brand Trust from Concerto Marketing Group.

Maintaining a brand is one of the more difficult tasks.  In the market, the brand is under attack from competitors who are offering new features, discounts or blended services that are aimed at taking away the brand’s customers.  In the company, the pressure is on the development and manufacturing functions to make the same product, but at a lower cost.  While each change to the product/service may be subtle or appear inconsequential, the cumulative effect over time may cause customers to notice and reject the brand.  Or, the change can come from well intentioned causes, as NECCO found out with their wafers.  Regardless of the cause, once the trust in the brand has been lost, so is the customer.

Marketing’s role in this environment is clear… to do everything to maintain the status quo and to clearly communicate the brand’s value proposition.  50 years ago this was done by print and point-of-sale advertising, today it is done via Facebook pages, twitter and other social media tools.  The objective however is the same; reinforce the brand’s image, its message and its value.

At the same time the Marketing department has to fight the internal battle against changing the product.  This should include significant testing of any changes before allowing them to be introduced, as well as maintaining and expanding the same level of frequency and reach that was used to establish the brand in “good” times, regardless of the cost.

Typically, selling to a customer who knows you costs less than trying to sell to a new customer.  Knowing that customers trust your brand and are buying it provides a base or foundation…providing that you maintain that trust.  At the speed with which changes occur in today’s market, failure to maintain the buyer’s trust can be fatal to a brand.

If internal changes are planned for your brand in 2012, whether in formulation or resources, have you fully tested their impact?  (By testing I mean better testing than what Bank of America and Netflix did before they changed their products.)  Can you anticipate the external attacks and how you will respond?

RHM

11/7/2011

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