The past two months have been spent in caring for my mother-in-law.  This has involved living in the Philadelphia area for an extended period, a hectic but pleasant Christmas and more than sufficient time to think about what goes on about us while we are doing “work.”

Here is the first of my observations, with others to follow:

The University of Pennsylvania Hospital has a new pavilion dedicated to dealing with sick people.  The facility, from top to bottom is superb.  Each examining room (on the floor we visited) is equipped with the requisite examining table, a desk area with stool and two chairs.  One chair is of normal size.  The other is 50% larger.

This larger chair started a chain of thought that went something like this…the U of P wouldn’t put in larger chairs unless they were needed, they are needed because people are larger, people are larger because of the quality of health care and nutrition they receive when they are young…no they are larger because they are obese. 

A visual observation of other patients (very non-scientific) reinforced my thought about the obesity issue.  There are a lot of sick, obese people in hospitals today.  Why are they obese?  Too many calories, not enough exercise.

Obesity has become an epidemic, and if not stopped will soon overwhelm our medical system with costs that could be avoided.  Some have called for taking away obese children from parents which they see as a form of child abuse. Certainly there is a precedent for Government action, as the Surgeon General was the power behind attempts to ban smoking.

My recommendation is less draconian and stems from my business background.  Place a significant tax on sugars (all types, cane, corn syrup and anything else that adds empty calories).  This will make high caloric sugar based items more expensive, and the monies raised can be used to offset the increasing costs of medical care.

In the 1700s, all that was available was refined cane sugar.  It was so highly prized that it was kept under lock and key and taxed.  Per capita sugar consumption, along with obesity, Type II diabetes, hypertension and other related medical problems was low.   In the 1700’s the average Englishman consumed about 4lbs of sugar a year.  Today it is estimated that the average American will consume over 150lbs of sugar a year.  I don’t think our bodies have evolved over the past 300 years to accommodate change of this magnitude.

As with all simple recommendations, this one doesn’t stand a chance due to the significant lobbying power of the food producers who will see their profits plummet.  Others will say that it is a regressive tax on the poor, for if they want to eat sugar, it will cost them more as a percentage of their income than the rich. 

To the food producers and lobbyists I ask, how do you sleep at night knowing that you are killing people?  To those concerned about the tax inequality, how much are you willing to be taxed in the future to pay for even higher medical costs?

As you can see, sitting in an extra large chair, with time to think, took me down a path of advocating for significant taxes on sugars.  While this is probably an imperfect solution with unintended consequences, the alternative that is facing us as a nation appears much less palatable.

Your thoughts?

RHM 1/17/2012

PS  Wide seats have a larger impact than just in hospitals: http://www.nytimes.com/2012/01/16/nyregion/transit-agencies-in-new-york-area-consider-wider-seats.html?

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

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

 I stated that customer satisfaction is the responsibility of EVERYONE!

Everyone “touches “  the customer and how everyone performs their job relates to the customer being satisfied.  I also listed several steps for starting a customer satisfaction program within any company. Lastly, Marketing should always look at their activities from the customer’s “glasses.”

Several people asked about research on customer satisfaction and activities that a company can perform and linking it to either starting a customer satisfaction program or improving their current customer satisfaction program.   Well the answer is a definite YES!

There are a number of approaches, companies and experts on this subject, but they basically boil down to a relatively small number of activities that help improve customer satisfaction.

Fundamentally, customers (both B2B and B2C) are looking for value (see my posting on good value propositions) and value is benefit minus cost.    Given this basic premise, one can link activities that focus on benefits and cost, and if one improves on these activities it will result in an improvement in customer satisfaction and in most cases have a positive impact on the company’s revenue stream.

Two examples of this relationship are:  One, developing a quality product that addresses a customer’s critical issues, resulting in a perceived benefit and subsequent purchases of that product or service. (e.g. disposable diapers)  Secondly, by developing a great relationship with the customer base or creating a wonderful image of your company that will be viewed as a benefit to the customer and again resulting in a purchase of the product or service. (e.g., Apple, Disney)

Bradley T. Gale’s book titled “Managing Customer Value” talks about developing a matrix of attributes related to customer satisfaction consisting of “levers” that when improved will result in an increase to the benefit attribute or when levers addressing costs are improved will also increase the overall value and thus the potential for increased revenues.   The key point is incremental or small improvements in some or all of these attributes have a multiplying impact on the revenue improvement factor.    So just a 1-5% improvement in several areas can result in increased revenues.  

So, as I stated before, everyone can impact customer satisfaction and there are metrics that can be put in place that do not require a major undertaking to measure overall customer satisfaction AND increased revenues. 

Have you stated your customer satisfaction program; if not why not?

RHL 8/16/11

The stumble in the economy could not come at a worse time.  Most companies are going into their planning for 2012, taking the first six months of 2011 as a baseline, estimating the balance of the year and using that information as the basis for 2012.  The information is not pretty and the forecasts are ugly.

This situation will produce the same old aphorisms and phrase; “Do more with less,” “Work smarter, not harder, “When the going gets tough, the tough get going” and so on.  The problem is that these trite phrases are the ones that have been repeated over and over since 2008.

There are 5 truisms that you, as the CMO, can use in planning for 2012.  If applied they will help, but not ensure that you will make the year.

1. Make sure that your product/service is differentiated.  If you have a “me-too” product you will only be able to compete on price, and no one wins a race to the bottom.  Lead with a differentiated product that offers more.
2. Provide quality.  Buyers, whether consumers or business, are looking to spend as little as possible over the long term.  They get this from quality products and service.  Poor quality reflects on their decision-making, and in the base of a business buyer, may be a career-limiting move.  Prove to the buyer that your product/service is superior in quality.
3. Service the buyer.  The day of “kiss and sell” is over.  Treat each customer as though they are unique, because they are.  The implementation of CRM tools makes it easy to personalize each buyer, both before and after the sale.
4. Match expenses to revenue.  For the next 18-24 months, the economy is going to be flat to down.  Unless you have a unique product in a growing segment, e.g., iPhone, plan on minimal growth and plan you expenses accordingly.  For example, if you are competing in an oligopolistic segment growing 2-3% a year, pouring money into building your brand may not be the best use of scarce resource.
5. Invest in Marketing.  This is not the time to cut back on Marketing.  Both Product Marketing and Product Management need to be fully funded.  The objective of most firms should be to maintain their market share, and if possible, grow it at the expense of competition.  This can only be done by fully funding marketing.  Moreover, everything is cyclical and this downturn will eventually correct itself.  When it does, those companies that have invested in Marketing will be the ones in the best position to take advantage of the upward curve.

For a related discussion on this topic, see the recent McKinsey article, We’re all marketers now…https://www.mckinseyquarterly.com/Marketing/Strategy/Were_all_marketers_now_2834

The next 18 months or so are going to be ugly.  There is no leadership emerging, either from Washington or from Wall Street.  The economy, worldwide, is drifting downward.  Companies that focus on their mission, and follow the 5 steps above will succeed.  Those that engage in attempts to win share and/or drive revenue by providing cheaper products, and choose to compete on a price basis, will lose.

Where are you in your 2012 planning?

RHM  8/4/2011

For the rest of you please read on.

In one of my postings titled Why Marketing Products and Services Are The Same, I discussed why, from a marketing point of view, products and services are the same.  I contend that the same is true about for profit and non-profit organizations.   As I always like to say, the recipe is the same but the ingredients are different. 

First of all, there are definitely some differences between for profit and non-profit. The major differences are:

1. From a legal/tax basis they are viewed and handled differently.
2. There are differences on how certain parts or groups within the organizations must behave and/or how they are governed. One example is how board members are organized and their compensation.
3. Probably the biggest difference is the money side.   How “revenues” are generated and what one can do with the “profits”.

Now why are for profit and non-profit the same from a marketing point of view?  Let’s look at the major marketing functions and see why.

Product or service research:  One must do a Marco/ micro segmentation for both for profit and non-profit to truly understand one’s targeted customers.  For a non-profit that has a single cause the audience will be very specific.  And, one must know the targeted customer’s”pain points” so you can develop the appropriate product /service/message to address the correct segment with your existing product/service/message.

Product or service introduction/offer:   What is the compelling offer today that would make your customer buy or donate?   You must provide all the necessary marketing support and collateral to address this.  Again, there is no real difference between for profit and non-profit.  The difference urging people to contribute to the Jimmy Fund today is not at all different from urging people to buy my software package.

Value:  In a guide that we offer titled, “How to Create a Value Proposition” the key point is do you have a value (Value= benefit- costs) that first, addresses a need, second is unique, third is compelling and fourth, is there value in the eyes of the potential customer?  I should stress even in non-profits, if you don’t articulate a value, why someone would donate to or join your organization.   What is that “ROI” from a customer’s perspective…understanding that it may be emotional and intangible vs. tangible?

Off/online Marketing:   Another point I always make is, it is not a question of which marketing tool to use BUT what is the appropriate mix!   If for example, a nonprofit is focused on the homeless, then there is a high probably that the homeless themselves will not have Internet access and thus blogging is not the answer, but it might be for the corporate sponsors that you have or are seeking.  To address the homeless, the marketing strategy might be to have posters at shelters, parks or other public places. Point is different media/methods for each audience.

Generating revenues:  Again, each type of organization needs revenue, be it from the sale of a product or service or a donation for a nonprofit.  These revenues come from some form of leads, which again must be generated using marketing tools that fit the firm/organization, aimed at keeping a funnel or pipeline full of prospects.

So, keep in mind whether it is for profit or non-profit, one still needs a strategy goals and a marketing plan to be successful.  The only difference is, the recipe is the same but the ingredients are different. 

RHL 5/27/11

The now iconic picture above, of President Obama and his staff watching Seal Team 6 in its mission against Osama Bin Laden shows tenseness, focus and concern.  What was happening was on the other side of the world, conducted by highly trained individuals engaged in a very risky mission, where multiple things could go wrong, including finding the wrong person at the designated address.

In arriving at his decision to launch the operation, it is reported that President Obama met directly with members of his staff and advisors several times, sorting through their inputs and recommendations before authorizing the go-ahead.

In short, the President relied on established relationships with his advisors and staff, built up over the past two years, which gave him trust in them and thereby minimized his risk.

Note that he met with them personally; he did not check them out on LinkedIn or ask them to “like” his page on this operation.  While emails were probably sent, they most likely did not ask the recipient to go to a web page and fill out a form.

While the purchase of six-figure software packages/solutions or pieces of capital equipment are orders of magnitude less significant that what the President authorized, the path to making the decision is similar:

• Information is gathered by people in the field using available tools, in the Bin Laden case, tips, satellites and surveillance, in the B2B transaction, Google search, references and publications.
• Then, in both cases, meetings are held.  Face-to-face sit down meetings where proposals are put forward, alternatives discussed and risks evaluated.  From these face-to-face meetings final decisions are derived.

Today much of the Marketing press, blogosphere and news is focused on the accepted change in the buying dynamic, i.e., that the buyer now has access to more, better information and is using that in his/her buying process.  All true, especially when it relates to consumer products and/or transactional items.  In some areas this has been summarized as “inbound marketing” where Marketing’s objective is thought to be limited to facilitating the finding of you (your website) and nurturing the buyer through the buying cycle.

However, when the buying decision is for a major purchase that impacts all aspects of a company, then social media, its tools, and the process are only part of the equation.  The decision maker is going to want to meet face-to-face and hear about the product before signing off on a purchase or lease.

It is important that B2B marketers are not to be overwhelmed by the inbound marketing hype and to lose sight of the personal relationship of the buyer and seller in a high-value B2B transaction.  Social media can help bring information to the table; it will not replace the trust in people that decision makers must have in order to reduce risk.

For today’s B2B Marketer, the answer is a mix of using the new tools to assist in the selling process, and using the old tools and process to provide trust and reduce risk to the buyer.

If you are a B2B Marketer, have you maintained the proper perspective regarding the personal relationship with the buyer?

RHM  5/15/2011

From Wikipedia:  In finance, rate of return (ROR), also known as return on investment (ROI), rate of profit or sometimes just return, is the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment. ROI is usually expressed as a percentage.

ROI is a useful tool for measuring the return from a company as whole, or a discrete piece of capital equipment, i.e., a milling machine, a truck, conveyor belt, etc.  It is totally inappropriate to use it as a measure of Marketing effectiveness.

Unfortunately, the rise of social media tools has been paralleled with an increase of metrics; opens, bounces, returns, page views, repeat visits, etc.  Because of these metrics some have suggested that Marketing can now be quantified and can be measured as a percentage, based on the “investment.”  Nothing could be further from the truth.

Taking each of the marketing segments in turn:

Product Management.  A Product Manager brings a new product to market.  Working with development, he/she provides a Market Requirements Document, works through a Functional Specification and then negotiates with development over a 12-18 month development cycle on the final product, including alpha and beta tests.  He/she is responsible for launching the product, pricing and positioning it based upon learned knowledge of the buyers, competitors, market conditions and need for profit, as well as training the sales force on how to sell it.  And it is well known that approximately 80% of new product introductions fail.   If the investment in a Product Manager is his/her salary, and success is measured after 2-3 years, it is hard to see how an ROI is calculated or even meaningful.

Corporate Marketing.  Corporate Marketing is responsible for establishing and maintaining the brand of the company, interfacing with the press and analysts and ensuring that the company’s position is well understood by all stakeholders.  This is a continuous job, with multiple variables always at play.  Investments may be all internal, or shared with outside firms or agencies.  Surveys can be conducted regarding how the brand and/or company are perceived vs. competitors and prior years.  But the essence of a brand is its emotional content with the buyer which is often developed over a long period of time.  Does it make sense to measure Corporate Marketing on an ROI?

Product Marketing Product Marketing, working with Product Mangement and Sales is responsible for developing and delivering leads within a defined time frame, usually 12 months.  Product Marketing uses a variety of tools to generate leads and help close sales including; direct mail, trade shows, webinars, YouTube, blogs, SEO, website, CRM tools, etc.  The goal of Product Marketing is to keep the sales funnel full and to deliver sales qualified leads to the sales force, thereby optimizing their performance.

The proper mix of old marketing tools and new marketing tools depends on the company, its maturity, its industry and competitive actions. There is no consistent right “answer” as to what works best that is applicable to all companies.  Hence any generation of an ROI is applicable only to that company and may vary year by year.

Going deeper, there is an art or craft to developing messaging that works both with old and new marketing tools.  The tactics used to get people to open and respond to a direct mail piece is different from those used to get people to open and respond to an email.  Trying to assign a value to this art is virtually impossible.

To be clear, ROI can be applied to marketing tools (CRM, Social media tools, etc.) when it can be shown that the new tools produce productivity improvements over current practices.  However, the subjective allocation of costs to events or programs, where the outcome is dependent upon numerous variables and calling this calculation an ROI is nonsence.  For example, allocating 1 ½ marketing people to the cost of a direct mail campaign, and assuming that all the sales that closed were the result of this campaign ignores or overlooks all other aspects involved.  Using this approach one can get an ROI that ranges from a negative percentage to 1000%…in short, meaningless.

Is your Marketing department measured on an ROI basis?  Let me know.

RHM  4/5/2011