Archive for the 'Marketing' Category

Sales Scalability for repeatable, reliable, and rising revenues

The startup mantra is scalability.  Build your product and IP.  Leverage it for high growth that attracts investors.  Repeat for the next funding level and continue until you exit.

Tech scalability is well known.   Code is the ultimate example of reusing a resource at virtually no cost.

Sales scalability though is still a mystery.  Marketing and sales are a custom, personnel-intensive, and thus costly part of company operations.

But that doesn’t have to be the case.

In Scaling Sales: From Craft to Machine Jeff Bussgang writes about successful sales models.  Sales teams though are just a part of sales and marketing process.

Here is how you engineer  a complete solution.

1. Avoid sucky marketing.  Scalability happens with accelerating returns, not the linear marketing like advertising that Wilson warned against.

2. Understand customer sales psychology. A typical product sale is actually a series of customer buying decisions. This Point of Decision approach requires separate marketing and sales processes with appropriate offers.

3. Manage the entire funnel.  Every step of the marketing and sales process needs to be optimized from prospecting to lead gen to lead nurturing to sales conversion to repeat or upsales.

4. Employ a marketing system.  Just like the tech investment in reusable code, a marketing investment in Point of Decision automated campaigns for direct or rep-closed sales features a low recurring cost.  Incremental sales have a much lower allocated marketing and sales cost that hikes margins and accelerates profitability.

This is what we do at Revenue Typhoon and Power CMO.

Strategic marketing breakthrough – Point of Decision

Earlier I commented on VC Fred Wilson’s smart quote “Marketing is for companies who have sucky products” and the failure of companies that focus on tactical programs when they should be thinking strategic.  I wrote:

Marketing is THE customer expert and advocate. … Marketing ensures that the product has the right features, optimal positioning, pricing, packaging, and promotion, and a market and customer-oriented product roadmap.

That’s only part of the solution.

For far too long marketing has been a custom, personnel-intensive, and thus costly part of company operations.  The lack of coupling between marketing and sales is the single largest failure, if not albatross, of Marketing today.

This is especially so at high performance companies that develop tech products that generate exponential returns or tighten the supply chain to wring out a magnitude of inefficiency and costs.  How can the Marketing department be just as responsive and productive?

The answer is not the “sucky” marketing that Fred Wilson so accurately wrote about.  Yes, you’ve got to have tactical marketing programs like a web site, newsletter, blog, social media, PR, etc.  But they’re akin to the modules of a software program – necessary but not the strategic organizational driver that’s going to make your business a huge success.

Let’s step back and look at this from an evolutionary perspective.

  • Fair marketing is product-driven.
  • Decent marketing is sales-driven.
  • Good marketing is customer-driven.

There is a clear trend that’s moving from me the provider to you the customer.  The next step is to dive even further into the customer to understand not just what he wants and needs, but how he makes decisions.

A typical product close is not one decision but a series of customer buying decisions that have their own individual marketing and sales processes.

The implementation of this Point of Decision  (really, Decisions) approach  is through a marketing system with  campaigns that  automatically and seamlessly work the lead through the sales ladder, deliver the offer, and promote the customer to the campaign on the next level and ultimately your target market.

One example that scratches the surface of Point of Decision is the free version of many software and web services today.

Point of Decision avoids the brute (and blunt) force trauma associated with much of today’s marketing with sales conversion rates that are a fraction of a percent. It’s a natural customer-centric process that puts the customer in control, while subtly selling at the same time.  As your prospect and then customer naturally arrives to and makes each individual buying decision, he gains trust in your company and product and becomes increasingly engaged.  The result is hugely more leads, more closes, and more revenues.

This is what we do at Power CMO Consulting and the Revenue Typhoon Marketing System.

Influence this, buddy

Wahooly offers online influencers stock in startups to help promote the companies (article).  Sounds like a good deal, right?

Not so fast. The first clue is that Wahooly charges a monthly fee of up to $450.  They’re not stupid.  If you’re a startup, they want your money, not your stock.

Even worse, it’s a sucker’s bet for online influencers.  Multiple the paltry number of shares you would get with the miniscule probability of success of a typical startup divided by the desperation factor of a company that doesn’t have a real marketing plan and sinks to such a program times the reality that dilution makes your stock worth a fraction of what you expected in the miracle event the company has a successful exit.  The average value comes to bupkes.

Do you really want to turn off your friends, business associates, and network and devalue your personal brand for that?

Real online influencers who don’t mind being bought, er sponsored, get cash or a junket to Maui (my operators are standing by).

If you’re not at that level, you’re much better off sticking with the free promotional USB drive, happy hour drink, or steak dinner their PR firm offers.  Failing that, at least get a photo of you and a hot booth babe or boytoy.

We Can’t Handle The Truth

David Brooks writes about Daniel Kahneman and his book - “Thinking, Fast and Slow” – in Who You Are (full article below).  The research essentially says that we’re still apes. Which explains why religion, guns, nationalism, ignoring climate change, giving corporations rights, and budget cutting in a depression all still reign.

We like to think that we’re in control, that we have free will, and that we’ve conquered evolution, assuming you believe in it.  We proactively lead our lives through that relatively newfangled piece of wetware, the logical neocortex part of our brain.

Yeah, right.  That’s not really thinking.  It’s feeling.  The primitive limbic system that evolved over millions of years is what rules.  This part of our noggin is responsible for emotion, behavior, long-term memory, and obsessing on reality shows.

We think we’re smart.  Warning labels work.  Advertising can be ignored.  Companies will police themselves. But none of that works.  That’s the just the tip of the subconscious iceberg.  The patterns and rhythms of jungle and tribe are our blood music, embedded  in the fabric of human existence and our very thoughts. We’re just clever monkeys.

Reality is not objective.  It’s not subjective.  It’s social.

Truly we can’t handle the truth.  We’re just built that way.  The power of memes is a direct descendent of the power of our genes.

So there is no one truth.  The truthsayers are not the logicians, scientists, and engineers.  They are the writers, preachers, and marketers like me.  We are the storytellers.  And we own you in ways you will never know.

 

David Brooks:

Daniel Kahneman spent part of his childhood in Nazi-occupied Paris. Like the other Jews, he had to wear a Star of David on the outside of his clothing. One evening, when he was about 7 years old, he stayed late at a friend’s house, past the 6 p.m. curfew.

He turned his sweater inside out to hide the star and tried to sneak home. A German SS trooper approached him on the street, picked him up and gave him a long, emotional hug. The soldier displayed a photo of his own son, spoke passionately about how much he missed him and gave Kahneman some money as a sentimental present. The whole time Kahneman was terrified that the SS trooper might notice the yellow star peeking out from inside his sweater.

Kahneman finally made it home, convinced that people are complicated and bizarre. He went on to become one of the world’s most influential psychologists and to win the Nobel in economic science.

Kahneman doesn’t actually tell that childhood story in his forthcoming book. “Thinking, Fast and Slow” is an intellectual memoir, not a personal one. The book is, nonetheless, sure to be a major intellectual event (look for an excerpt in The Times Magazine this Sunday) because it superbly encapsulates Kahneman’s research, and the vast tide of work that has been sparked by it.

I’d like to use this column not to summarize the book but to describe why I think Kahneman and his research partner, the late Amos Tversky, will be remembered hundreds of years from now, and how their work helped instigate a cultural shift that is already producing astounding results.

Before Kahneman and Tversky, people who thought about social problems and human behavior tended to assume that we are mostly rational agents. They assumed that people have control over the most important parts of their own thinking. They assumed that people are basically sensible utility-maximizers and that when they depart from reason it’s because some passion like fear or love has distorted their judgment.

Kahneman and Tversky conducted experiments. They proved that actual human behavior often deviates from the old models and that the flaws are not just in the passions but in the machinery of cognition. They demonstrated that people rely on unconscious biases and rules of thumb to navigate the world, for good and ill. Many of these biases have become famous: priming, framing, loss-aversion.

Kahneman reports on some delightful recent illustrations from other researchers. Pro golfers putt more accurately from all distances when putting for par than when putting for birdie because they fear the bogie more than they desire the birdie. Israeli parole boards grant parole to about 35 percent of the prisoners they see, except when they hear a case in the hour just after mealtime. In those cases, they grant parole 65 percent of the time. Shoppers will buy many more cans of soup if you put a sign atop the display that reads “Limit 12 per customer.”

Kahneman and Tversky were not given to broad claims. But the work they and others did led to the reappreciation of several old big ideas:

We are dual process thinkers. We have two interrelated systems running in our heads. One is slow, deliberate and arduous (our conscious reasoning). The other is fast, associative, automatic and supple (our unconscious pattern recognition). There is now a complex debate over the relative strengths and weaknesses of these two systems. In popular terms, think of it as the debate between “Moneyball” (look at the data) and “Blink” (go with your intuition).

We are not blank slates. All humans seem to share similar sets of biases. There is such a thing as universal human nature. The trick is to understand the universals and how tightly or loosely they tie us down.

We are players in a game we don’t understand. Most of our own thinking is below awareness. Fifty years ago, people may have assumed we are captains of our own ships, but, in fact, our behavior is often aroused by context in ways we can’t see. Our biases frequently cause us to want the wrong things. Our perceptions and memories are slippery, especially about our own mental states. Our free will is bounded. We have much less control over ourselves than we thought.

This research yielded a different vision of human nature and a different set of debates. The work of Kahneman and Tversky was a crucial pivot point in the way we see ourselves.

They also figured out ways to navigate around our shortcomings. Kahneman champions the idea of “adversarial collaboration” — when studying something, work with people you disagree with. Tversky had a wise maxim: “Let us take what the terrain gives.” Don’t overreach. Understand what your circumstances are offering.

Many people are exploring the inner wilderness. Kahneman and Tversky are like the Lewis and Clark of the mind.

Social Marketing: It’s Relationships, not Numbers

I’m a numbers man.  Yeah, it’s a competitive guy thing.  Today it’s marketing metrics.  Seven years ago it was social media.

I saw the top Dallas LinkedIn member had 1,200 connections.  In the words of a A Chorus Line, I said “I can do that”.  And I did, and much more.  In three years I was number three in the world.  Objective achieved.

Value modest.  Cost in time great. Return low. Recommended no.

The past two years the game has changed, expanded to Facebook and Twitter.  But there is one difference.  At least with LinkedIn I had access to connection data like location and industry to target contacts.  I had an email address I could mail (for now, until LinkedIn takes that away). It’s a real contact.

You don’t have that with Facebook and Twitter.   The value of a marginal unengaged contact is nil. And 100,000 times 0 is still 0.  As Paul Gillin writes in Do fans and followers really count?, anyone can buy or acquires tens of thousands of followers.  So you can keep your 45,293 twitheads.  I’m not impressed.

Our updated scorecard for the Twitter numbers studs:

Value negligible.  Cost in time modest. Return negligible. Recommended never.

And it’s a good thing.  Because you can focus on the numbers that really count – customers, sales, and engagements.  You can build relationships that have real enduring value … not big numbers filled with hot air.

Now if you still want to build those LinkedIn connections, have I got a deal for you …

Exponential marketing

( Short link http://wp.me/pAEbu-83 )

In earlier posts I discussed Demand Generation and Is marketing for companies with sucky products? It generated a variety of questions on which marketing is right for you.

So I herewith present the Grand Unification Theory of Marketing.

Marketing^1 (that’s Marketing to the first power, HTML is a bit limited here).  Linear marketing include most marketing programs and provides proportional results. Direct marketing and sales are examples.  It’s not going to catapult your business.  But it’s well understood, measurable, and comparatively safe.  This is the type of marketing that can be manufactured and optimized through Demand Generation for steady revenues.

Linear marketing is not a fit for funded ventures where investors require hypergrowth.  This is what Venture Capitalist Fred Wilson bashed in the sucky product article.

Linear marketing can be enjoyed by all companies.  It’s particularly suited to any organization that can’t, or doesn’t want to, attempt higher order and higher risk marketing.

Marketing^2. OPR (Other People’s Resources) generates outsize returns beyond standard programs.  By leveraging the customers, contacts, and other assets of other companies you bring your costs down and increase sales beyond your own capabilities.   Marketing and sales partnerships, co-marketing, distribution, and PR can have this effect.  It’s an effective way for  companies that are small or have limited resources to quickly grow.

Marketing ^n. Exponential marketing encompasses product, viral,  social, and crowdsourcing programs.  Typically you’re investing in your product and leveraging your users to generate accelerating returns.  Exponential marketing is highly risky.  Sucky products need not apply.  It’s where new ventures must be focused to meet investor expectations and fulfill stratospheric financial projections.

Free the Times!

The New York Times has gone retro.  They’re creating an online paywall.  The first 20 articles are free.  After that it’s $15 a month.  It didn’t work the first time a few years ago.  But like the McRib they keep bringing it back.

Now I don’t expect the Times to get Net religion. But it should charge a reasonable fee.   $15 is excessive pre-Internet thinking. It’s like record companies charging $10-15 for an online album with protected files, often more than the price of a physical CD.   How well did that work out?

At some point I hope the Times will do the math, accept real-world economics, and grok that it’s better to land 1 million subscribers at $5/month than 100,000 at $15.

If you are an anarchist, pirate, renegade, digital rights activist, or are cheap, vote with your wallet, have little better to do with your time, or are just not in the mood to be old school, you can just say No … just like it was easy for consumers to get around the music industry’s stone age practices with mp3′s and p2p file sharing.

Here are a few ways to free the Times.

  • NYTClean Bookmarklet.  An elegant solution.
  • Go to the address book, delete the text after .html, and reload
  • Twitter feed of Times articles – FreeNYTimes, Free Unnamed News
    , and The Times direct.
  • Use a different browser
  • Use Firefox with Cool Previews add-on, which happens to show the whole article.
  • Paywall Smasher extension for Google Chrome.
  • Launch a new  “incognito” window in Chrome.
  • User Script. Requires manager like Grease Monkey for Firefox or  Greasekit for Safari and scrip like this.
  • BugMeNot. There already is a cottage industry in sites with free passwords.
  • Aggregators.  Links from blogs will be free.  An army of sites will spring up virtually mimicking the Times now that there is a need.
  • Use Google to read 5 free articles a day.
  • Erase all your cookies or just that of nytimes.com
  • Use a different computer or device, or IP address proxy like dtunnel

If the Times cracks down on some of these practices, fear not!  There will be plenty of new cracks, tools, and techniques to take their place.

Note:  The following techniques appear to no longer work.

Is Marketing for companies with sucky products?

VC Fred Wilson writes “Marketing is for companies who have sucky products.”

Yes. And No.

I absolutely agree with him that the key is to build a great product and not force or pay for marketing. But much of building that product … is marketing.

Fast growth doesn’t magically happen.

Marketing is the difference between technology – which is a better widget – and a product – which is a better widget that gets used. Marketing is THE customer expert and advocate.

Marketing is responsible for understanding customer pain and market competition and opportunities.  Marketing ensures that product has the right features, optimal positioning, pricing, packaging, and promotion, and a market and customer-oriented product roadmap. Marketing typically writes the business and marketing plans and develops the pitch and slide deck to help gain funding.  Marketing directs the UI, grows and supports evangelists, handles outgoing and incoming communications, articulates and writes benefits and copy, and develops partners and channels.

All of this is critical to fast track the product so it can go viral and be a great success … without spending the unnecessary money or time on PR, SEO, and other external programs that Wilson cites.

Market on!

Charity: the trick to consumer-set pricing

This economic depression has forced marketers to be more creative.  It’s kickstarted a renaissance in pricing.  I wrote earlier on Daily Deals in I Can Get it for you Wholesale.  Another trend is letting the consumer set his own pricing.

The difficulty with such variable pricing is that there are no standards, norms, or techniques  to prevent freeloaders who wouldn’t normally buy or “selfish” consumers who maximize their own value at the expense of the seller and pay nothing or close to it.  This is a classical Tragedy of the commons situation.

Typical tactics to increase pricing include:

  • Suggested price. Provide a minimum, suggested amount, or related guidelines, similar to donations in the public sector world.
  • Peer Pressure. Displaying what other users paid.
  • Premium. Award a bonus or publicity scaled by payment amount.
  • Transparency. Disclose actual costs so the consumer can hopefully make an informed decision about how much profit he’s willing to let you make.

Add Charity share to the list.  Giving an amount or percentage to charity has long been a part of the marketing toolset to raise sales or conversion.  But it works especially well with consumer-set pricing.  The Freakonomics blog  points to a wonderful study in  How to Maximize Pay-What-You-Wish Pricing where donating a major share of the payment has a huge impact on both consumer sales and price.

Ayelet Gneezy, a marketing professor at the University of California-San Diego, conducted a field experiment at a theme park (sample size: over 113,000).  Gneezy presented four different pricing schemes for souvenir photos: a flat fee of $12.95; a flat fee of $12.95 with half going to charity; pay-what-you-wish; and pay-what-you-wish with half going to charity.  At a flat fee of $12.95 per picture, only 0.5% of people purchased a photograph; when customers were told that half the $12.95 purchase price would go to charity, a meager 0.59% purchased a photo. Under the simple pay-what-you-wish variation, 8.39% of people purchased a photo, but customers paid only $.92 on average. The final option — pay what you wish, with half the purchase price going to charity — generated big results: purchase rates of 4.49% and an average purchase price of $5.33, resulting in significant profits for the theme park. “When the charity factor is introduced, these casual freeloaders balk at the idea of paying nothing, because it’s more likely to reflect badly on them,” writes Ed Yong. “Rather than naming a higher price, their preference is to avoid buying altogether -– for them, it isn’t worth it. Sales fall, but the actual profits go up because the remaining customers are motivated by their desire for the product and for the cause, will pay for both.”

What other techniques have you seen?

I can get it for you wholesale

The Daily Deal bubble continues to explode.  VCs pour in ever more money.  Aggregators and white labellers build out the market.  Major estores and sites like have even joined the fun.  Amazon bought Woot. Twitter has @earlybird.  Marketers contrive 90% off packages that include “free” services, fake retail prices, and future discounts.

It’s no coincidence this product segment took off during a global depression.  It’s 2010-style coupon clipping.  This isn’t just a discount.  With today’s deals, you don’t just avoid paying retail.  You can buy at wholesale prices.

The deals started to move discontinued merchandise.  It was only a short hop to extend them to service businesses that have a high margin.  Now there are so many deals that you can get much of what you need -  such as PC … headphones … restaurant … massage … golf … trip – all at 50% off.  Or more.

This isn’t just promotional marketing. It’s deflation in action.  People have less money and are spending less.  Businesses have to cut prices.

When was the last time you paid regular prices for dinner when you could have used a 50% off deal?


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