Archive | June, 2012

Remarketing: How Online Ads Follow Your Every Move

28 Jun

Over the last decade, online display advertising has gradually become a little too relevant. It’s not uncommon to see ads for items that you have recently shopped for or sites that you have recently visited. Sometimes, these ads seem to stalk you, following you from website to website across the web as you browse, taunting you with images of specific items that you recently considered or decided to not to buy.

A few months ago, I came very close to purchasing a new desk from the web store of a national furniture chain. I placed the desk in my cart but after seeing tax and shipping decided not to complete the purchase. That’s when the marketers took over: ads for the item started appearing all over the web. I started receiving email reminders of my unfinished purchase. Two days later, I received a 15% off coupon that I could use on any item at their nearest store. I bought the desk and some other things that weren’t part of my original plan. Somehow, the marketers won.

These techniques aren’t exclusive to consumer marketing. Salesforce.com, for example, uses similar tactics to show ads to targeted enterprise prospects.

The key technique is “remarketing” — the process of showing targeted ads across multiple sites based on a prospect’s browsing or buying patterns.

How does remarketing work?

1. It starts with a cookie: When a sales prospect visits your site or clicks on an email, a single line of code drops a cookie to trigger the remarketing process. The marketer doesn’t need to know who you are or even have you in their database, they just need to drop a cookie and learn from your online behavior.

2. Consumers are segmented based on value: The cookie contains data to identify the type of prospect. If you add an item to your cart and abandon the purchase process, get ready to see lots of remarketing ads. Typically, marketers focus on categories of users and create remarketing paths that apply to thousands of users.

3. Marketers buy remarketing ads, clicks, or leads: Once the cookie is dropped, the advertiser can purchase ads on networks that span multiple sites. Either through a remarketing service or directly through the major ad networks themselves, the advertiser displays ads that are designed to lure the buyer back. The most sophisticated advertisers will feature the high-margin product that a prospect considered but abandoned. Ads can be purchased on Google or Bing or a number of remarketing-focused services.

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The Tough Work of Building an Authentic Brand

20 Jun

Let’s start with the bad news: if you have a crappy product or service, you’ll never be able to build a great brand.

In the modern era of personal recommendation, community, and engagement, the best brands are built from authenticity. They derive from purpose. They build customer passion by delivering on commitments that matter. They are an extension of meaningful customer relationships. They are built on trust and shared values.

Building an authentic brand isn’t easy, but there is a roadmap:

1. Start with purpose: The best brands take shape deep within the organization. Before you can talk about your external brand, you need to articulate your purpose. What are you trying to accomplish as a company? What customer problem are you trying to solve? What are you going to do that really matters? Building consensus around purpose can be an explosive, difficult process. But once you find agreement, your purpose will become your most important organizing principle.

2. Make customer commitments: While your purpose is an internal compass, it drives the promises that you will make to your customers. Whether you have articulated them or not, all of your customer relationships are built on implicit and explicit customer commitments. In the same way that Apple customers expect beautiful functional design and Southwest Airline customers expect cheap and efficient air transportation, your customers will evaluate your brand based on their perception of the commitments that you make. There are no exceptions: strong brands are built on strong, consistent customer commitments. If your purpose is your internal reason for being, your customer commitments should be the foundation of your external identity.

3. Invest first in your customer experience: Here is the thing about purpose and commitment: you can’t fake it. If you are just positioning, your brand will fail. So if you have work to do to deliver on your purpose and customer commitments, do that work before you spend time and money on building your brand. A smart marketer once wrote, “If the brand is a promise you make, then the customer experience is the fulfillment of that promise.”

4. Think of your brand as an extension of the customer relationship: A brand, in its simplest form, is what people collectively say, think, and feel about your company, product, or service. It is the relationship that you form through customer experience but also engagement and conversation and community.

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Analysis: Just 28% of B2B Sales Compensation Pays for Selling

15 Jun

In the movie industry, smart investors measure how much of each dollar “hits the screen.” Money spent on the product — film production, actors, sets, and the like — has the potential to generate a return. Money spent off the screen on insurance, cars, administrative staff, paperwork, lawyers, accountants, security, and other back office functions typically doesn’t generate any return.

The same is clearly true for managing sales organizations. Sales compensation budgets, in particular, have the biggest impact on revenue and margin when the dollars  pay for selling. They have less of a direct impact when they pay for sales operations, sales administration, and sales time spent on non-selling activities.

So how much of every sales compensation dollar “hits the screen?” In a typical B2B sales organization the answer is: shockingly little. Based on my analysis, roughly 28% of sales compensation actually pays for selling. The rest pays for other peripheral activities.

What are the biggest syphons of sales resources?

(1) Non-Selling Time: According to a recent Accenture study, just 41% of sales rep time is spent on selling via the phone or face-to-face. 59% of sales time is spent doing other things. In particular, nearly a quarter of sales time is spent in meetings and on administrative tasks. The remainder of time is spent in training, account service, and account research.

(2) Sales Operations and Administration: It’s not uncommon to see sales support budgets of 20% or more. Sales support teams often handle everything from quoting to order-takign and fulfillment. In some large organizations, team manage go-to-market structure, sales compensation, sales training, and other sales related functions.

(3) Turnover and New Rep Training: According to the Accenture study, 25% of sales representatives changed jobs last year (11% left voluntarily, 14.8% were terminated). With a typical new representative hiring and ramp time of 6 months or more, at least 12.5% of sales compensation is spent on ramping new sales representatives to productivity.

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Categorizing Sales Prospects: Understanding Propensity & Engagement

12 Jun

As the sales process becomes digitally observable, smart sales and marketing organizations are developing sophisticated mechanisms to electronically score leads and prospects.

A typical business-to-business sales person manages 1,000 – 2,000 sales contacts. If they are lucky, they’ll also interact with hundreds of new leads each year. In sophisticated organizations, leads and prospects “travel” with electronic scores that help sales people prioritize outreach and focus on the highest value accounts. This scoring information is typically one dimensional: often a single score or categorization that captures demographics facts, project details, qualification information, and measures of engagement.

A much better approach is to evaluate and score prospects based on two discrete dimensions: propensity and engagement:

  • Propensity Scores: For any lead or prospect, a propensity score compares collected demographic information to that of other prospects to determine the probability of a purchase and potential opportunity value. If you sell hammers, a construction contracting company might be a high propensity target while a dry cleaner may not. By considering attributes such as industry, employee size, contact title, budget, revenue, headquarter country, company revenue, and company profitability, propensity scores qualify leads and prospects based on their fundamental attributes and statistical propensity to buy.
  • Engagement Scores: The problem with propensity scores is that they aren’t able to differentiate a cold lead that doesn’t know you exist from a prospect that has done their research and is ready to buy. Engagement scores, on the other hand, vary in real-time based on electronic measurement of prospect activity, increasing whenever a prospect takes an action that indicates interest in your products or services. A sophisticated engagement score might measure a prospect’s web visits to your site, calls to your office, participation in online communities, mentions of your company in social media, interaction with an electronic product demo, content downloads, online video consumption, and email communication. If they stop interacting, the score would automatically decline.

For most companies, propensity and engagement scores are discrete and mutually beneficial. A prospect that is high engagement / low propensity may be eager to talk but unlikely to buy. A prospect that is high propensity / low engagement will be hard to reach and unready to engage with sales. Propensity scores tend to be relatively static while engagement scores should be continually changing.

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The CRM Crisis: Why Sales Force Automation Failed

4 Jun

Just two decades ago, B2B sales people spent most of their time filling out computer forms to manually track hundreds of pieces of data on customers and accounts, mostly for the benefit of managers who watched their every move. Two decades later, virtually nothing has changed.

Over the last twenty years, consumer web and desktop software has evolved: the consumer world has become social, mobile, and location aware. Interfaces have become simple, intuitive, and pleasurable. Data collection has become automated and increasingly intelligent.

During the same period, enterprise software has made surprisingly little progress. In the case of sales force automation (SFA) and customer relationship management (CRM) software, the lack of innovation in the user experience is particularly remarkable. While new software-as-a-service models have streamlined deployment, customization, and IT management of CRM tools, the tools themselves haven’t evolved at nearly the pace of other technologies.

CRM has a problem: it’s not working as advertised. A 2011 Accenture study of sales effectiveness and CRM usage found that only 16.9% of companies using CRM believed that their CRM tools improved win rates. Only 11.8% believe that their CRM tools shortened sales cycles. And only 15.4% and 3.7% believe the tools increase revenue and margin respectively. Where did CRM tools help? The survey showed that slightly more than half of companies believe that CRM helps to improve communication between sales people and their managers. Why? Likely because forcing sales people to document every activity improves managements ability to monitor activities and to discuss them with their teams.

Today, almost every business-to-business organization struggles with basic sales force management problems that have plagued the industry for decades:

  • Sales activity tracking remains a largely manual effort: CRM systems are filled with information on customers, prospects, accounts, and activities. It’s not uncommon for companies to require more than a hundred fields of data on a typical opportunity and the corresponding accounts and contacts. What do all of these data points have in common: they are typically manually entered into a web browser or software application by the sales people themselves.

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New Research: Only 40% of Your Marketing Budget is Wasted

2 Jun

Yes. Yes. Yes. We’ve all heard too many times the old adage that 50% of all marketing budgets are wasted. But now there is good news: new research shows that only 40% of the average marketing budget is wasted.

According to Advertising Age, new research concludes that “despite six years of obsessive investment in big data, marketing-mix models and other analytic tools, marketers are getting worse, not better, at directing their dollars.”

The research, included in a new book by Rex Briggs, argues that marketers focus too much on driving awareness and not enough on driving advocacy. In a world of social media, it’s never been more important to drive advocacy.

It also asserts that most modern media mix models do not reflect the complexity of the modern media world. As a result, advertisers over-invest in TV and price promotion and systematically underinvest in  social media. Recent analysis by Mary Meeker also suggests that this may be true: that print advertising in particular receives too much spend while social and mobile receive too little.

According to the analysis, “the underinvestment he finds in social media doesn’t broadly extend to digital. Since 2006, return on investment from branded-content efforts has skyrocketed, even as ROI from digital advertising has been flat to slightly down, despite a steady drop in digital ad prices. A big reason for the latter two trends has been publishers placing more ads and clutter on web pages, which he said has increased revenue per page but eroded impact and CPMs.”

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